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Domestic Public Debt and Private Sector Credit in Nigeria: Does Sectoral Impact Matter?

Ikenna-Ononugbo, Azumi A.
Publication Date
End of Embargo
Supervisor
Arora, Rashmi
Jalilian, Hossein
Keywords
Domestic public debt, Private sector, Crowding out, Crowding in, Interest rate channel, Credit channel, Aggregated, Disaggregated, Domestic banks, Safety assets, Nigeria
Rights
Creative Commons License
The University of Bradford theses are licenced under a Creative Commons Licence.
Peer-Reviewed
Open Access status
Accepted for publication
Institution
University of Bradford
Department
School of Social Sciences. Faculty of Management, Law and Social Science
Awarded
2023
Embargo end date
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Theses
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PhD Thesis
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Abstract
This study investigates the importance of sectoral effects in the domestic public debt-private sector credit nexus in Nigeria from 1981-2020 and finds that sectoral effects are essential for domestic public debt and private sector credit in Nigeria. Aggregated credit to the private sector and disaggregated credit to the manufacturing, agriculture, mining and quarry, real estate and construction, trade and general commerce, and services sectors responds heterogeneously to changes in domestic public debt, with the credit channel as the transmission channel at both levels. Domestic public debt crowds out aggregated credit to the private sector and in all sub-sectors at the disaggregated level except the agriculture and mining and quarry sectors, where there are crowding in and an uncertain effect. Also, domestic public debt has a threshold effect on aggregated credit to the private sector and credit to the trade and general commerce sector, with higher level of domestic public debt-to-GDP ratio having detrimental effects on credit. The study, therefore, shows that a healthy and robust banks’ balance sheet is important for increased lending to the private sector in Nigeria and recommends that the government should imbibe policies that promote investment friendly environment to mitigate incidences of loan defaults, thereby making the private sector less risky for domestic bank lending. Also, a framework for mobilising and properly channeling the under-utilised funds of the household sector should be developed and encouraged for increased private sector lending, while ensuring that domestic public debt stock growth does not surpass its optimal GDP threshold.
URI
https://bradscholars.brad.ac.uk/handle/10454/20368
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Type
Thesis
Qualification name
PhD
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