Abstract

Successive governments in Nigeria have implemented various reforms aimed at improving institutional quality, particularly in the areas of governance, accountability, and regulatory effectiveness. Despite these efforts, the expected improvements in economic performance have not been achieved, indicating a complex and possibly non-linear relationship between institutional quality and macroeconomic outcomes. This study therefore investigated the effect of institutional quality on economic performance in Nigeria, addressing a gap in the existing literature which has predominantly focused on economic growth rather than broader indicators of economic performance. The study adopted an ex post facto research design and utilised annual time series data covering the period from 1987 to 2025. Data on economic performance, institutional quality, inflation rate, interest rate, and gross fixed capital formation were sourced from the Central Bank of Nigeria Statistical Bulletin and the World Governance Indicators dataset. The Autoregressive Distributed Lag (ARDL) technique was employed to examine both the short-run and long-run relationships among the variables, while statistical inferences were made at the 5 per cent level of significance. The empirical findings revealed that institutional quality has a negative and statistically insignificant effect on economic performance in both the short run and the long run. The study concluded that institutional quality alone is insufficient to drive economic performance in Nigeria. Consequently, the study recommended that policymakers adopt a more comprehensive macroeconomic framework that incorporates critical variables such as inflation rate, interest rate, exchange rate dynamics, unemployment, money supply, and balance of payments conditions in order to achieve sustainable improvements in economic performance.

Keywords

Economic performance, institutional quality, inflation rate, interest rate, gross fixed capital formation

File: 1788355980_4._WASMSR_Vol_11_1_.pdf

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