Portfolio Investment and Banking Sector Growth in Nigeria
ABSTRACT Over the years, attempts to explore the effect of foreign portfolio investments have always been correlated with aggregate economy, whereas, portfolio investments from abroad go into different sectors that make up the aggregate economy. Hence, this study departed from the norms and examined the relationship between foreign portfolio investment and banking sector growth in Nigeria from 2010 to 2019. Banking sector growth was proxied with the total assets of the sector and expressed as a linear function of equity foreign portfolio investment, debt foreign portfolio investment and exchange rate. Quantitative data used in this study were gathered from the Central Bank of Nigeria Statistical Bulletin of various editions while analysis of the data was done with ordinary least square multiple regression technique. Findings from this study evinced that equity foreign portfolio investment was found to be negatively and insignificantly related to the growth of the banking sector. Furthermore, it was revealed that debt portfolio investment and official exchange rate were positive and significant determinants of banking sector growth, such that debt foreign portfolio investment positively predicted banking sector growth by 6% for every 1% change in its value while exchange rate facilitated banking sector growth by 50% for every 1% change in its value. Based on these results, it was concluded that foreign portfolio investment was positive determinants of banking sector growth; hence, it was recommended that government should continue to encourage foreign portfolio investment by liberalizing the procedures and formalities for the transfer of capital across the border…
Citation: Omotayo, V.A., Adewole, A.J., & Ogunlokun, D.A. (2022). Portfolio Investment and Banking Sector Growth in Nigeria. International Journal of Innovative Research in Accounting and Sustainability, 7(2), 85-94.