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Keywords

financial stability, government debt, market capitalization, nigeria, treasury single account system

Abstract

This study investigates the effect of the treasury single account system on financial stability in Nigeria. Specifically, we hoped to find out if speculation of government regarding government debt and stock market performances are met. The study utilized data published in the Central Bank of Nigeria statistical bulletin for a period of 2011-2020. The time series data collected were analyzed using descriptive and inferential statistics. The findings revealed that the TSA system had a negative impact on government debt performance, with significant negative impact on advances from commercial banks and external debt finance charges. However, it had an insignificant negative impact on overdraft from Central bank of Nigeria (CBN). In the case of stock market performance, it was revealed that the TSA system had a significant negative impact on stock market liquidity and stock market size. It is therefore concluded that, as speculated, the TSA system improved government debt performance as it reduces it, but adversely affects the stock market performance. The study therefore recommended that in the adoption of the TSA system, the government must salvage the financial system from shock by readjusting its fiscal policies.

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