Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 287

Full Length Research Paper

Association between foreign capital inflow and macroeconomic factors: Evidence from Nigeria

Etumudon Ndidi Asien1* and Victor Oriavwote2
1Accounting and Finance Programme, Faculty of Humanities and Social Sciences, Federal University, Otuoke, P.M.B. 126 Yenagoa, Bayelsa State, Nigeria. 2Economics and Development Studies Programme, Faculty of Humanities and Social Sciences, Federal University, Otuoke, P.M.B. 126 Yenagoa, Bayelsa State, Nigeria.
Email: [email protected], [email protected]

  •  Accepted: 10 October 2013
  •  Published: 30 November 2013

Abstract

This paper empirically examines the association between foreign capital inflows to Nigeria and real growth rate of gross domestic product, domestic credit to the private sector, rate of inflation, perceived level of corruption and market capitalization.  Data covering the period 1982 and 2012 were analyzed using econometric models of cointegration technique with its implied error correction model (ECM). Results are consistent with a priori expectations as the parsimonious ECM tests suggest that high level of corruption constitutes the greatest impediment to foreign capital inflow to Nigeria.  Further, the documented evidence suggests that high rate of inflation has a negative impact on foreign capital inflow to Nigeria.  The short-run dynamic results suggest that domestic credit to the private sector, real growth rate of gross domestic product and market capitalization have been beneficial to foreign capital inflows to Nigeria. 

Key words: Foreign capital inflows, foreign direct investment, gross domestic product growth, real growth rate of gross domestic product, inflation, domestic credit to private sector, market capitalization, perceived level of corruption, Nigeria.
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