Internal Debit and Community Spending Evidence From Southwest Nigeria

Abstract

Internal debits are increasing drastically however, Government borrows in terms of it infrastructural and operational developments of the federal blocks of Nigeria are not increasing commensurately. Empirically, the study was conducted to examine the effect of internal debit on community spending across all the state governments in the southwest region of Nigeria, using panel regression. The study covered 8 years, spanning from 2011 to 2018 and the panel data used was sourced from the CBN statistical bulletin (2019) and the annual budget of each of the sampled states. It was discovered that internal debit employs a positive but insignificant effect on repeated spending of all the states in the southwest region of Nigeria to the tune of 0.1096 (p=0.352>0.05) and that internal debit utilizes a negative and insignificant effect on capital spending of all the states in the southwest region of Nigeria to the tune of -0.0485>0.733. It was established that while internal debit could not improve persistent spending significantly, it has the potency to decrease capital spending of state governments in the southwest region of Nigeria. Thus, it was recommended that while it might necessary for the state governments to borrow money to finance budget deficit, they should always set their priorities right and ensure that resources are allocated to the most productive sector of the economy.