CORPORATE BOND INVESTMENT, MANUFACTURING INVESTMENT AND ECONOMIC GROWTH IN NIGERIA: EVIDENCE FROM A NONLINEAR ARDL APPROACH
Abstract
This study assesses the asymmetric effect of corporate bond investment, manufacturing investment, and real interest rate on Nigeria’s economic growth using the Nonlinear Autoregressive Distributed Lag (NARDL) model. Annual time series data covering the study period 1985–2025 were sourced from the Central Bank of Nigeria and the World Bank were analyzed to capture both the short-run and long-run effects of positive and negative shocks in the explanatory variables. The findings reveal stable long-run association among the variables. Findings from the study also reveal that corporate bond investment exerts the strongest and most significant long-run influence on Nigeria’s economic performance, indicating the role of the corporate bond market in mobilizing long-term finance for productive investment. On the other hand, both the positive and negative components of manufacturing investment are statistically insignificant, indicating that manufacturing investment does not translate into sustained economic growth, probably due to structural constraints. Regarding real interest rates, the positive component is only marginally significant, while the negative component is insignificant, suggesting a weak monetary policy transmission to the real sector. The study concludes that Nigeria’s corporate bond market has strong potential despite its current size as a long-term economic growth driver, while manufacturing investment mainly influences short-run support. Drawing from findings, recommendations are proffered to improve the regulatory framework in order to strengthen the corporate bond market, enhanced market liquidity, improved manufacturing productivity, and lower real borrowing costs to support the growth-sustaining effects of investment. Together, these policies are aimed at enhancing growth in corporate bond investment, manufacturing investment, and an investor-friendly real interest rate, which will support the overall positive performance of the other sectors of the economy.