An Empirical Analysis of National Debt, Debt Servicing and the Growth of the Nigerian Economy (Published)
Nigeria’s national debt and debt servicing expenditure has been on the increase since from 1981 till date, this has prompted the researchers to study the impact and economic implications of this rise in debt and debt servicing profile on the growth of the Nigerian economy. The study adopted annual debt stock, debt service expenditure and the control variables of exchange rate and inflation rate as the independent parameters which were regression against gross domestic product as proxy for the growth of the Nigerian economy and response variable. Secondary data were collected from Central Bank of Nigeria Statistical Bulletin and the Debt Management Office for the ranging from 1981 to 2019. The study employed multiple regression techniques assisted by the E-views computer software for the analysis of data. The results revealed that annual national debt and exchange rate had significant impact on the growth of the Nigerian economy with a P-value of 0.0180 and 0.0070 respectively which were less than the 0.05 level of significance. Debt servicing and inflation rate had no significant impact on economic growth in Nigeria with a P-value of 0.1054 and 0.5011 respectively. In the overall, the results of the model indicated that debt and debt servicing had statistically significant effect on economic growth with overall probability of F-statistics value of 0.050683 which less than the 0.05 significance level. Based on the findings the study recommended that the monetary authorities should put in place appropriate steps to properly manage the Nation’s debt stock and the cost of servicing debt; and that the country’s borrowings should be invested on viable capital projects as well as human capital that will yield economic returns.
The movement of capital across national boundaries has remained an interesting area in development narratives considering its role in the development process. This paper provides deeper insights into the empirical relationship between capital inflows and per capita GDP growth in Nigeria between 1980 and 2018. The heterogeneous nature of foreign capital was taken into consideration following its decomposition into its key components of debt, aid and migrants’ remittances. Time series for each of the variables were collected from secondary sources including NBS, World Bank World WDI, World Bank, International Debt Statistics and IMF International Financial Statistics. Combinations of ADF unit root and bounds cointegration tests in addition ARDL and Granger causality tests form basis for the analysis. It was found from the unit root test results that the variables are mixed integrated. Again, the bounds test show evidence of long run relationship amongst the variables. The ARDL estimates reveal that migrants’ remittances have the significant positive effect on per capita GDP in the long run. With 1 percent increase in remittances, per capita GDP will, on the average, increase by about 2.2595 percent. On the other hand, multilateral debt negatively affects per capita GDP in both short and long run. It was found from the results that bidirectional causality exists between migrants’ remittances and per capita GDP while unidirectional causality flows from technical cooperation grants to GDP per capita. Given the findings, it is recommended that policy makers should initiate policies and provide incentives helpful for mobilizing international resources and allow for a paradigm shift that will ensure the allocation of the resources to key sectors with high potentials for growth of per capita GDP.
Capital Structure and Firm Performance Nexus in Nigeria: A Case Study of Aluminum Extrusion Company PLC (Published)
This study investigated the link between capital structure and firm performance in Nigeria using Aluminum Extrusion Company PLC (ALEX), a company listed under the Basic material sector of the Nigerian Stock Exchange as a case study. The study adopted return on capital employed as proxy for firm performance (response variable), while capital structure components such as debt to equity ratio, debt to capital employed ratio and equity to capital employed ratio were used as the explanatory variables. Secondary data were collected from the annual published financial reports of the company for the period 2009 to 2018. The study employ descriptive statistics and multiple regression technique based on the E- view 9.0 Software as the methods of data analysis. The results revealed that debt to equity ratio has significant positive effect on return on capital employed, debt to capital employed ratio has negative influence on return on capital employed and equity to capital employed ratio has no influence on return on capital employed. Overall, capital structure has no significant effect (at 5% level) on firm performance. Based on the findings, the study recommended among others that the company should finance her activities with retained earnings and use debt as the last option as this is in agreement with the perking Order theory; that the indirect effect of capital structure on firm performance be analyzed by future researchers and that the company managers are advised to be extremely conscious in the use of debt financing as an option in their capital mix up to the optimal limits, as debt to equity ratio provides positive effect though not significant on performance.
This study investigated the effect of capital structure on firm performance using a sample of seven companies listed under the consumer goods sector of the Nigerian Stock Exchange. The study adopted return on assets as proxy for performance (the response variable), while capital structure components such as debt to equity, debt to capital employed and equity to capital employed were used as the explanatory variables. Secondary data were collected from the annual published financial reports of the sampled consumer goods sector companies for the period 2009 to 2018. The study employed descriptive statistics and multiple regression technique based on the E-view 9.0 software as the methods of data analysis. The results revealed that debt to equity has insignificant positive impact on return on assets, debt to capital employed and equity to capital employed had negative but insignificant effect on return on assets. Over all, capital structure has no significant effect (at 5% level) on firm performance in the consumer goods sector. Based on the findings, the study recommended among others that the management of consumer goods sector companies should exercise caution in considering the use of debt finance (following the Pecking order theory) in their capital mix up to the optimal limits, as debt to equity ratio provided insignificant positive effect on performance; and that further studies be conducted on other sectors of the economy to provide more robust generalized inferences.
The Application of the Binary Logistic Model: A Case of Joint Stock Commercial Bank for Investment and Development of Vietnam (Bidv) in Vinh Long Province (Published)
This study aims to estimate the factors affecting the probability of repayment of individual customers, corporate customers at BIDV in Vinh Long province. The sample data includes 403 individual customers and 160 corporate customers who selected from the BIDV’s customer data set. The regression analysis results tested seven factors affecting the probability of debt repayment of individual customers with significance level 0.10 from 9 factors proposed. Besides, five factors affecting the probability of debt repayment of corporate customers with significance level 0.05 from 8 factors proposed.