Abstract

This study focused on domestic debt and economic growth in Nigeria, while the specific objectives were to examine the impact of treasury bills, bond, inflation and interest rates on economic growth. It is an expost- facto type of research and covered time periods of twenty-nine (29) years which was 1994 to 2023. It employed secondary sources of data collection which were obtained from Central Bank of Nigeria (CBN) statistical bulletin. The statistical tools used for the study, include Ordinary Least Square (OLS) regression, Unit Root test, Co-Integration and Error Corrections Model (ECM). The diagnostic test includes Ramsey RESET test for misspecification and Breusch–Pagan-Godfrey Serial Correlation LM test for the presence of auto correlation. Outcome of this study showed that domestic debt proxied by treasury bills and bonds have significant positive relationship with economic growth, while inflation and interest rates were statistically insignificant and have negative relationship with economic growth. By implications, treasury bills and bonds are critical and enhancing factor of economic growth, while inflation and interest rates are weak influencing factors of economic growth. The study concluded that domestic debt is crucial in the enhancement of economic growth in Nigeria. The study therefore recommended that treasury bills and bonds should be used to fund infrastructures like transportation, health and power sectors while interest rate and inflation rates are in close watch.