Publication Date: 2023/07/19
Abstract: The study examined the asymmetric cointergrating relationship between financial development and investment and the moderating role of institution quality on investment.Time series properties were examined using the Augumented Dickey Fuller (ADF) and the Philip-perron (PP) unit root test. It also used the Threshold AutoRegressive (TAR) and momentum Threshold Autogressive (MTAR) for cointergrating investigation, then the Vector Error Correction Model (VECM). The core explanatory variable used in the study was financial development, proxy by the IMF financial development index. While the explained variable is foreign direct investment and domestic investment, then the moderating effect of institutional quality was examined. The results show that there was evidence of both symmetric and asymmetric integration between these variables. A long cointegrating relationship between institutional quality, financial development and investment was found. The study found evidence of asymmetric cointegrating relationship between institutional quality, financial development and investment. Furthermore, it was observed that investment adjusted faster in the positive discrepancy than the negative which suggested that an optimal level of finance is crucial for economic growth. It is therefore, expected that the Nigerian government through the Central Bank put in place policies capable of improving on financial development and further improve on the fight against corruption so ride our investment institutions of sharp practices.
Keywords: Financial Development, Foreign Direct Investment, Domestic Investment, Institutional Quality and Nigeria.
DOI: https://doi.org/10.5281/zenodo.8163832
PDF: https://ijirst.demo4.arinfotech.co/assets/upload/files/IJISRT23MAY1592.pdf
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