Determinants of Capital Flows into Nigeria: An Autoregressive-Distributed Lag (ARDL) Approach

Journal of Economics and Trade 1(1): 38-50, 2016

13 Pages Posted: 17 Oct 2016

See all articles by Chris Ogbechie

Chris Ogbechie

Pan-Atlantic University - Lagos Business School

Friday Anetor

University of Lagos

Date Written: October 13, 2016

Abstract

The rate of capital flows into the emerging markets is alarming and has become a subject of debate in the literature. It is mostly believed that capital flows are beneficial to the economies of the developing countries as it engenders the efficient allocation of global resources thereby increasing the availability of capital required for investment and economic growth. Despite the general belief, the macroeconomic variables that determine capital flows remain controversial. In the light of this, the study attempted to examine the long-run and short-run determinants of capital flows into Nigeria. The study employed secondary data sourced from the Central Bank of Nigeria (CBN), FRED Economic data, and World Development Indicator between the periods of 1986-2014. Using the econometric technique of Autoregressive Distributed Lag Model (ARDL), the study found that exchange rate (LnEXR) and stock market prices (LnSP) are important determinants of capital flows into Nigeria both in the short-run and long-run. It is, therefore, recommended that the government, through its policies, should make concerted effort in boosting the activities at the stock market in a bid to attract capital flows into the country.

Keywords: Capital flows; ARDL; Nigeria.

JEL Classification: C10, F21

Suggested Citation

Ogbechie, Chris and Anetor, Friday, Determinants of Capital Flows into Nigeria: An Autoregressive-Distributed Lag (ARDL) Approach (October 13, 2016). Journal of Economics and Trade 1(1): 38-50, 2016, Available at SSRN: https://ssrn.com/abstract=2853308

Chris Ogbechie

Pan-Atlantic University - Lagos Business School ( email )

Km 22 Lekki Epe Expressway
Ajah
Lagos
Nigeria

Friday Anetor (Contact Author)

University of Lagos ( email )

Akoka
Yaba
Lagos, LA Lagos state 234
Nigeria

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