DAVISON, Ukachukwu Ohurogu
Department of Banking and Finance, Nasarawa State University Keffi.
Email: dohurogu@yahoo.com
CAJETAN, Chinedu Anyanwu
Department of Banking and Finance, Nasarawa Statae University Keffi.
Email: ccanyanwu@hotmail.com
JOHN, Toro Gimba
Department of Business Administration, Veritas University Abuja.
Email: gimbatoro@gmail.com
ABSTRACT
This study examined the effect of inflation rate and money supply on foreign direct
investment in Nigeria over the period of 1985 to 2022. It utilized time series research design and secondary data were obtained from Central Bank of Nigeria Statistical Bulletin. It employed the Auto-Regressive Distributed Lag (ARDL) model to examine both the short run and long effect of the selected variables on foreign direct investment.
The bound co-integration test result showed evidence of long run relationship among inflation rate and money supply on foreign direct investment in Nigeria. In the long run, the result of the ARDL model showed that Inflation rate and money supply have no significant effect on foreign direct investment in Nigeria. In the short run, it was revealed that inflation rate was found to have a negative and statistically significant effect on foreign direct investment, while money supply has a positive and significant effect on foreign direct investment. The study recommends that efforts should be made by monetary authorities to reduce the inflation rate if the policy objective of increasing FDI is be achieved.
Keywords: Auto-Regressive Distributed Lag Model, Foreign Direct Investment, Inflation Rate,
Money Supply.