Deficit Financing and Capital Formation in Nigeria

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Discussion

Observational analysis shows deficit financing affects capital formation in Nigeria, indicating crucial financial dynamics.

Deficit financing positively impacts capital formation in Nigeria, particularly through government bonds.
Results indicate a significant positive effect of external borrowing on capital formation, while domestic borrowing negatively affects it.
Analysis used data collected from the CBN Statistical Bulletin and applied the Error Correction Model methodology.
Findings suggest that enhancing tax revenue and domestic financing is essential for sustainable capital formation.

Esumobi et al. (2025) studied this question.

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