An Empirical Investigation of the Impact of Deficit Financing on Socio-Economic Activities in Nigeria (from 1997-2007)

Abstract

This study was conducted to investigate the impact of deficit financing on socio-economic activities in Nigeria. To achieve this objective research questions were raised, hypotheses were formulated and relevant literatures were reviewed. In gathering the necessary data for this study, various publications of the Central Bank of Nigeria statistical bulletin of the period 1997-2007 were considered. Our findings revealed that deficit financing has a positive and significant relationship with economic activities but a positive and insignificant relationship with socio/community services. This implies that deficit financing is more tailored towards social development, but lack of prudence and frugality in management of public funds in Nigeria hinders the realization of this ream. It was therefore recommended that since our political leaders refused to be financially disciplined, deficit financing in Nigeria should be brought to a very low level or worst still, be discouraged irrespective of its political justifications.