This study examined the connection between the management of external reserves and the economic growth of Nigeria over the period from 1985 to 2013. As the dependent variable, the model was defined using external reserves, while the explanatory variables are gross domestic product, exchange rate, monetary policy rate, foreign direct investment and inflation. Secondary data was collected from Nigeria's Central Bank and calculated using the Augmented Dickey-Fuller, Johansen co-integration and multiple regression studies. The study revealed that a major long-term relationship exists between external reserves and the development of the economy of Nigeria. It was further shown that explanatory variables were clarified and 90% differences in the dependent variable were accounted for, which is proof of a strong model fit. The multiple regression findings have also shown that GDP, MPR and FDI are extremely statistically relevant, whereas IFR and EXR are statistically insignificant. This means FDI, MPR and GDP are contributing At a pace of 5%, which also means that the economy's good output is a positive indicator for the inflow of foreign direct investment that affects the economy's reserve status. The study recommended that good policies should be placed in place to develop a good relationship with foreign investors, and idle reserves should be invested domestically to produce competitive exportable goods for more foreign currencies earning in the region.
Author (s) Details
Dr. Akinwunmi, Adeboye Akanni
Department of Banking and Finance, Achievers University, Owo, Nigeria.
Ajala, Rosemary Bukola
Department of Banking and Finance, The Federal Polytechnic, Ado Ekiti,
Nigeria
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