ABSTRACT
This study
investigated the determinants of capital flows to Nigeria for the period 1980
to 2020. The determinants of capital flows were categorized into push, that is,
global factors such as international liquidity, global real gross domestic
product (GDP) growth rate, global risk aversion, and global interest rate and
pull factors, that is, domestic factors such as Nigeria's real GDP growth rate,
Naira-Dollar exchange rate, monetary policy rate, and inflation. Capital flows
were measured by foreign direct investments (% of GDP), foreign portfolio
investments (% ofGDP), and growth rate ofinternational banks' credit flows.
Using the Augmented Dickey-Fuller unit root test approach, the data collated
for the study were found to be ofmixed integration, (that is at levels and
first difference) which necessitated the application of the Autoregressive
Distributed Lag (ARDL) for the long and short run . relationship among the
variables. The ARDL bounds tests showed that capital flows and its components
were cointegrated with the push and pull factors that were used as the
independent variables. In the long run, it was found that aggregate capital
flows was negatively and significantly affected by push factors such as global
real GDP growth rate, volatility index and global interest rate and pull
factors such as domestic real GDP growth rate, exchange rate and domestic
inflation rate were found to be negative and significant determinants of
capital flows. In the short run, all the push factors all had a significant and
negative effect on capital flows except the global interest rate which turned
out with a positive coefficient. For the disaggregated capital flows, it was
observed that the push and pull factors had a time varying effects on foreign
direct, foreign portfolio and international banks’ credit flows but the effects
were more significant in the short run probably due to the boom and burst of
both global and domestic business cycle. Overall, the interactions between push
and pull factors were found to be more dominant in capital flows determination
following the high coefficient of determination observed in the error
correction mechanism. The error correction mechanisms for the models showed a
significant adjustment of aggregate capital flows from short run shocks to long
run equilibrium following the dynamics and interactions of the push - pull
factors. These results suggested that efforts geared towards attracting capital
flows to Nigeria, policymakers should take cognizance of both push and pull
factors in policy formulation.
KINGSLEY, O (2025). Analysis of the Determinants of Capital Flows to Nigeria:- Onyele, Kingsley O. Mouau.afribary.org: Retrieved Oct 08, 2025, from https://repository.mouau.edu.ng/work/view/analysis-of-the-determinants-of-capital-flows-to-nigeria-onyele-kingsley-o-7-2
ONYEKACHI, KINGSLEY. "Analysis of the Determinants of Capital Flows to Nigeria:- Onyele, Kingsley O" Mouau.afribary.org. Mouau.afribary.org, 08 Oct. 2025, https://repository.mouau.edu.ng/work/view/analysis-of-the-determinants-of-capital-flows-to-nigeria-onyele-kingsley-o-7-2. Accessed 08 Oct. 2025.
ONYEKACHI, KINGSLEY. "Analysis of the Determinants of Capital Flows to Nigeria:- Onyele, Kingsley O". Mouau.afribary.org, Mouau.afribary.org, 08 Oct. 2025. Web. 08 Oct. 2025. < https://repository.mouau.edu.ng/work/view/analysis-of-the-determinants-of-capital-flows-to-nigeria-onyele-kingsley-o-7-2 >.
ONYEKACHI, KINGSLEY. "Analysis of the Determinants of Capital Flows to Nigeria:- Onyele, Kingsley O" Mouau.afribary.org (2025). Accessed 08 Oct. 2025. https://repository.mouau.edu.ng/work/view/analysis-of-the-determinants-of-capital-flows-to-nigeria-onyele-kingsley-o-7-2