Sources of Public Funds and Economic Prosperity: The Nigerian CaseOnyele KO* and Nwokoacha EB
Department of Banking and Finance, College of Management Sciences (COLMAS), Michael Okpara University of Agriculture, Nigeria
- *Corresponding Author:
- Kingsley O Onyele
M.Sc. Student, Department of Banking and Finance
College of Management Sciences (COLMAS)
Michael Okpara University of Agriculture
Umudike, Abia State, Nigeria
E-mail: [email protected]
Received date: August 01, 2016; Accepyed date: September 22, 2016; Published date: October 02, 2016
Citation: Onyele KO, Nwokoacha EB (2016) Sources of Public Funds and Economic Prosperity: The Nigerian Case. J Bus Fin Aff 5:215. doi: 10.4172/2167- 0234.1000215
Copyright: © 2016 Onyele KO, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
This study examined the various sources of public funds and their resultant effect on economic growth in Nigeria from 1986-2014. The sources of public funds considered in this study were tax revenue, oil revenue, external debt and national savings. Two models were used in this study; one analyzed the effect of these individual sources of public funds on economic growth, while the other model explained the effect of aggregate government revenue on economic growth. The times series data sourced from Central Bank of Nigeria Statistical Bulletin were analyzed using unit root tests, cointegration tests and vector error correction mechanism (VECM). The unit root test revealed that all the variables were stationary at first difference except tax revenue which was significant at level. The cointegration tests (both Johansen and Engle-Granger) showed that a long run relationship existed between the individual sources of public funds and economic growth, as well as aggregate government revenue and economic growth. The results obtained for model one revealed that tax revenue and oil revenue had a positive effect on economic growth, while national savings and external debt exerted a negative effect on economic growth. With respect to total government revenue, economic growth depleted as a result of changes in total government revenue. Finally, it was recommended among other things that government should fulfil her obligations of social and economic welfare to her citizens, so that anyone who enjoys such services will be conscious of tax payment in Nigeria.