Open AccessCausal Relationships between Financial Development, Foreign Direct Investment and Economic Growth the Case of Nigeria
Author(s) -
Philip Ifeakachukwu Nwosa,
Ajibola Mary Agbeluyi,
Olufemi Saibu
Publication year - 2011
Publication title -
international journal of business administration
Language(s) - English
Resource type - Journals
eISSN - 1923-4015
pISSN - 1923-4007
DOI - 10.5430/ijba.v2n4p93
Subject(s) - foreign direct investment , causality (physics) , augmented dickey–fuller test , unit root , economics , error correction model , unit root test , granger causality , investment (military) , vector autoregression , monetary economics , econometrics , macroeconomics , cointegration , political science , physics , quantum mechanics , politics , law
This study examined the causal relationships among financial development, foreign direct investment and economic growth in Nigeria over the period 1970 to 2009. The study utilized the Augmented Dickey-Fuller (ADF) for unit root test and the variables were found to be stationary, though not in their level form but in their first difference. The Johansen and Juselius (JJ) co-integration technique indicated the presence of co-integration among the variables. The tri-variate vector error correction model (VECM) test for the causal relationships showed the presence of causality among financial development, foreign investment and economic growth. The study concluded that financial development and foreign direct investment have a statistically significant causal influence on economic growth