IMPACT OF DISAGGREGATED DOMESTIC DEBT ON ECONOMIC GROWTH OF NIGERIA: ECM APPROACH

The study investigated the impact of domestic debt on economic growth in Nigeria from 1981 to 2019. The paper used secondary data sourced from both Central Bank of Nigeria Statistical Bulletin and World Bank’s Development Indicators 2019. Domestic debt instruments were used to make up the domestic debt and they include; Treasury Bills, FGN Bonds, Treasury Certificate, Treasury Bonds and Development Stocks. The study employed Johansson co-integration, and Error correction mechanism as techniques for data analysis. The result showed that TB, FGNB, TBOND exert significant direct association with RGDP while TC has inverse linkage with RGDP. The result also showed that there were both long run and short run relationship existing between domestic debt and economic growth of Nigeria as indicated by cointegration and parsimonious error correction model. Therefore, the study recommends that the government should implement wider reforms that promote investment in development stocks, FGN bonds, treasury bills and treasury bonds. Institutional investors such as SEC, Pension Funds, insurance companies etc should be encouraged to invest in the listed instruments.