INSTITUTIONAL QUALITY AND ECONOMIC PERFORMANCE ASSESSMENT: EVIDENCE FROM NIGERIA

Abstract

The assessment of institutional quality and its influence on economic performance is highly relevant in Nigeria due to the country's constantly changing governmental institutions, dynamic market circumstances, and diversified socioeconomic atmosphere. Thus, the study aims to investigate the impact of institutional quality on the economic performance of Nigeria. This study employed ex post facto research, while time series data was used, which spans from 1996 to 2021, sourced from the Central Bank of Nigeria (CBN) and the Worldwide Governance Indicators (WGI). The study employed unit root tests, Johansen cointegration, and the Error Correction Model as estimation techniques. However, post estimation tests such as normality, serial correlation, heteroskedasticity and stability tests were carried to ascertain the level of statistical accuracy outcome of the variables used. The findings suggest that there is a sustained nexus between the quality of institutions and characteristics related to economic growth. Also, it was equally found out that political stability has a significant impact in the short run. This suggests that a unit increase in political instability would definitely amount to a decrease in economic performance in Nigeria during the period under investigation. The study suggests enhancing accountability, transparency, administrative efficiency, and law adherence to improve Nigerian institutions. This can be achieved through reform implementation, capacity building, and good governance mechanisms, while reducing political unrest and fostering stability.