Global Advanced Research Journal of Management and Business Studies (ISSN: 2315-5086) November 2017 Vol. 6(7), pp 208-215

Copyright © 2017 Global Advanced Research Journals   


Original Research Articles

Causal and Long-Run Relationship between Foreign Capital Inflow and Domestic Savings in Nigeria

1Dr. Eze, Onyekachi R. and 2Dr. Okparaka, Vincent C. J

1Department of Accountancy, Banking and Finance, Ebonyi State University, Abakaliki.

2Department of Insurance and Risk Management, Enugu State University of Sciences and Technology.

Corresponding author email:

Accepted 28 December 2017


This study examines the causal and long-run relationship between foreign capital inflow and domestic savings in Nigeria. The study employed the annual time series data from 1970 to 2014for the following variables: Domestic Savings (S), Foreign Direct Investment (FDI), Home Remittances (REM), Official Development Assistance (ODA) and Portfolio investment (PTF). Using econometric procedures, unit root test of ADF revealed that all the variables were integrated at level. Johansen Co-integration test showed the existence of long-run relationship among the variables. In testing for causality with the use of granger causality test, the results obtained indicate that there is an existence of uni-directional relationship between foreign capital inflow and domestic savings in Nigeria, meaning that foreign capital inflow  causes domestic savings in Nigeria while domestic savings does not cause foreign capital inflow. The policy implication as evidenced from the results of the study is that government should endeavour to attract more remittances and FDI from international community into the country since these two variables showed positive relationship with domestic savings.

Keywords: Domestic Savings, Foreign Direct Investment, Home Remittances, Development Assistance, Long-run 



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