Main Article Content
Abstract
The study is on the impact of external debt on capital formation in Nigeria from 1981 to 2022 using the Quantile Autoregressive Distributed Lag (QARDL) model. The findings indicate that external debt has a notable adverse effect on capital formation in Nigeria, suggesting that increased levels of external debt impede capital formation by disrupting investment choices and distorting economic growth prospects. Additionally, the study reveals a positive relationship between gross domestic product and gross national savings on capital formation. Granger causality tests support the significance of external debt and national savings as key predictors of capital formation in Nigeria. The study recommends that policies should be geared toward increasing transparency in debt management, promoting domestic savings, diversifying the economy, enhancing export capacity, improving financial sector regulation, fostering public private partnerships, and monitoring debt sustainability indicators. Implementing these recommendations can enhance capital formation, stimulate economic growth, and reduce reliance on external borrowing in Nigeria