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<p>This study examines the long-run relationship between public debt and the stability of the banking sector in Nigeria, with a particular focus on the moderating influence of the rule of law. Employing cointegration techniques such as FMOLS, DOLS and CCR, the analysis reveals that public debt significantly destabilizes the banking system, whereas institutional quality contributes to enhanced stability. However, the interaction between debt and the rule of law becomes negative. This indicates that excessive indebtedness may undermine the advantages of institutional strength. These findings highlight the necessity of prudent fiscal management in conjunction with robust legal and institutional frameworks to ensure financial stability.</p>

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Public debt, rule of law and banking sector stability in Nigeria

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年1月27日

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  • Chukwudi Emmanuel Edeh,
  • Joel Michael Ibrahim,
  • Eberechukwu Nkem Onodu,
  • Edith Chinyere Ugo-Okoye

摘要

This study examines the long-run relationship between public debt and the stability of the banking sector in Nigeria, with a particular focus on the moderating influence of the rule of law. Employing cointegration techniques such as FMOLS, DOLS and CCR, the analysis reveals that public debt significantly destabilizes the banking system, whereas institutional quality contributes to enhanced stability. However, the interaction between debt and the rule of law becomes negative. This indicates that excessive indebtedness may undermine the advantages of institutional strength. These findings highlight the necessity of prudent fiscal management in conjunction with robust legal and institutional frameworks to ensure financial stability.