Financial Capital Inflows, Food Security, and the Role of Institutional Qualities: The Nigerian Experience in a Case of Multiplicative Interaction Modeling
Financial Capital Inflows, Food Security, and the Role of Institutional Qualities: The Nigerian Experience in a Case of Multiplicative Interaction Modeling

Summary/Abstract: Diverse perspectives on the ability of foreign capital inflows to boost growth exist, and this is steadily provoking policy worries for the agenda of sustainable development in emerging economies. In this study, the mediating role of institutions was investigated in assessing the impact of Financial Capital Inflow (FCI) on Nigerian poverty alleviation. By utilizing Food Security (FDS) as a proxy for poverty, the study diverted from conventional proxies of health, education, or HDI. The institutional regression variables used are Voice and Accountability, Political Stability, Corruption, Rule of Law, and Governance Effectiveness. The principal component of governmental monetary, fiscal, and trade policy is one of the control variables employed in the study. Six multiplicative interaction models were built as part of the study, and data from 1996 through 2021 were used. The sourced data were stationary either at levels or at first difference. The Restricted Error Correction Autoregressive Distributed Lag(RECM-ARDL) was employed as the estimation method. Institutions were found to significantly influence the ability of capital inflows to reduce poverty. The study recommends that Nigerian institutions needs to be strengthened in order to increase the effectiveness of capital inflows as poverty reduction strategy in Nigeria.

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