Analysis of the Impact of Domestic Debt on Private Investment in Nigeria

Abstract

The study is on the impact of domestic debt on private investment in Nigeria for the period 1975-2020. The study adopted ARDL model of estimation, the result showed that domestic debt has negative impact on private investment in Nigeria; further result revealed that domestic debt can induce some level of macroeconomic instability and the result is not surprising because government domestic borrowing is more than the private sector borrowing crowds out the private sector which may lead some economic malaise such as unemployment, slowdown in private sector investment and development among others. The study concludes that domestic debt (DGDP) has a negative significant impact on private investment in Nigeria which implies that as government increases its borrowing from its organizations and financial institutions such as CBN, mortgage bank and their like which will subsequently cause a reduction in private investment.