Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm Case
The article examines the firm’s investment growth effect following capital liberalization and financial constraints. It employs firm-level aggregated data of 80 firms for the period of 2006 to 2016. Employing the differenced dynamic panel regression technique, the analysis has revealed among others...
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| Format: | Article |
| Language: | English |
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Riga Technical University Press
2021-01-01
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| Series: | Economics and Business |
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| Online Access: | https://doi.org/10.2478/eb-2021-0014 |
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| author | Okungbowa Ewere Florence O. |
| author_facet | Okungbowa Ewere Florence O. |
| author_sort | Okungbowa Ewere Florence O. |
| collection | DOAJ |
| description | The article examines the firm’s investment growth effect following capital liberalization and financial constraints. It employs firm-level aggregated data of 80 firms for the period of 2006 to 2016. Employing the differenced dynamic panel regression technique, the analysis has revealed among others that investment growth appears to be significantly determined by cash flow (internal), thereby indicating the presence of profound financial constraint among firms in all industries. Second, the capital account liberalization appears to drive investment more through the indirect channel (capital/credit availability channel proxied by cash flow). Third, capital account liberalization-investment growth nexus appears to be less sensitive and significant with high profitability. This could be attributed to “profit flight” or repatriation of profit by foreign investors who may not necessarily prefer ploughing back of profit, which has implication for further expansion of investment among firms. This suggests that the level of capital openness is still low; hence, there is a need for further liberalization of the capital account with some mandate of profit ploughing back. |
| format | Article |
| id | doaj-art-c8d33293d87d4dc0b6e1389884c46c2b |
| institution | Kabale University |
| issn | 2256-0394 |
| language | English |
| publishDate | 2021-01-01 |
| publisher | Riga Technical University Press |
| record_format | Article |
| series | Economics and Business |
| spelling | doaj-art-c8d33293d87d4dc0b6e1389884c46c2b2024-12-02T08:50:34ZengRiga Technical University PressEconomics and Business2256-03942021-01-0135120121410.2478/eb-2021-0014Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm CaseOkungbowa Ewere Florence O.0Benson Idahosa University, Benin City, NigeriaThe article examines the firm’s investment growth effect following capital liberalization and financial constraints. It employs firm-level aggregated data of 80 firms for the period of 2006 to 2016. Employing the differenced dynamic panel regression technique, the analysis has revealed among others that investment growth appears to be significantly determined by cash flow (internal), thereby indicating the presence of profound financial constraint among firms in all industries. Second, the capital account liberalization appears to drive investment more through the indirect channel (capital/credit availability channel proxied by cash flow). Third, capital account liberalization-investment growth nexus appears to be less sensitive and significant with high profitability. This could be attributed to “profit flight” or repatriation of profit by foreign investors who may not necessarily prefer ploughing back of profit, which has implication for further expansion of investment among firms. This suggests that the level of capital openness is still low; hence, there is a need for further liberalization of the capital account with some mandate of profit ploughing back.https://doi.org/10.2478/eb-2021-0014capital account liberalization (capital movement)cashflowsfirmsinvestmentprofitp49f21h32p45 |
| spellingShingle | Okungbowa Ewere Florence O. Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm Case Economics and Business capital account liberalization (capital movement) cashflows firms investment profit p49 f21 h32 p45 |
| title | Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm Case |
| title_full | Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm Case |
| title_fullStr | Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm Case |
| title_full_unstemmed | Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm Case |
| title_short | Cash Flow and Profit Impact on Capital Account Liberalization-Investment Growth Nexus in Nigeria: An Aggregated Firm Case |
| title_sort | cash flow and profit impact on capital account liberalization investment growth nexus in nigeria an aggregated firm case |
| topic | capital account liberalization (capital movement) cashflows firms investment profit p49 f21 h32 p45 |
| url | https://doi.org/10.2478/eb-2021-0014 |
| work_keys_str_mv | AT okungbowaewereflorenceo cashflowandprofitimpactoncapitalaccountliberalizationinvestmentgrowthnexusinnigeriaanaggregatedfirmcase |