Abstract
Our study empirically investigates the effect of public sector financial management on gross production in Nigeria. The study starts with the review of some theoretical and empirical literature as concerning the public financial management. After examining the stochastic characteristics of each time series by testing their stationarity, the study used predictive causality test, a two-stage least squares (2SLS) an instrumental variables approach for data set from 1970 to 2012. The findings were reinforced by the presence of static equilibrium relationship, as evidenced by the two-stage least squares. Results suggest that time limits set for the realization of these goals would encourage commitment, probity, accountability and transparency by public funds managers. Particular attention needs to be directed to the management of these variables to reverse the current trend. The study therefore, concludes that effective public sector financial management in Nigeria must consider the behavioral pattern, the social context, as well as time limits set for the realization of set goals. This will encourage commitment, probity, accountability and transparency by public funds managers.
Highlights
Public sector financial management is concerned with the economic behavior of government with regards to the methodologies, rules, regulations and policies that shape the planning, budgeting, forecasting, coordinating, directing, influencing and governing the inflow and outflow of funds in order to maximize the objective of the institution
From the ADF test statistics and zero maximum lag the results show that D(LOUTPG), D(LDODEBT), D(LEXDEBT), D(LGOVREV), D(LGTEAD), D(LGTEES), D(LGTESC), D(LGTTRA) and D(CGOV)were all integrated at order one, that is I(1) or they were stationary at first difference
The null hypothesis is that the explanatory variable does not ‘Granger’ cause output growth and vice versa. These results suggest that the direction of causality is from domestic debt (LDODEBT) to output growth (LOUTPG) and from external debt (LEXDEBT) to output growth (LOUTPG) since the estimated F is significant at the 5 per cent level; the critical F value is 2.18
Summary
Public sector financial management is concerned with the economic behavior of government with regards to the methodologies, rules, regulations and policies that shape the planning, budgeting, forecasting, coordinating, directing, influencing and governing the inflow and outflow of funds in order to maximize the objective of the institution. Operations – can be defined as the administration of the ways in which the government derives its financial resources, records, restricts and accounts for their use. In other words, it is the management of the inflows into and outflows of funds from the government treasury. Many countries in the developed and developing world have been making important and impressive achievements in strengthening public financial management and governance
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