New Insights into Financial Sector Development and Economic Growth Nexus in Nigeria

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Oladotun Olaniran
Oladotun Olaniran
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Aderajo Oluwatosin Mary
Aderajo Oluwatosin Mary

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New Insights into Financial Sector Development and Economic Growth Nexus in Nigeria

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Abstract

This paper examined the relationship between financial sector development and economic growth in Nigeria. The paper used the Principal Component Analysis (PCA), Autoregressive Distributed Lag Model (ARDL),Structural Break Test and the Pairwise Granger Causality Test (PGC) to examine the effect of financial development on economic growth in Nigeria and to establish which theory holds for Nigeria between the demand-following and the supply-leading theory. Annual time series data between 1981 and 2016 was used for the study. Data on real gross domestic product, broad money supply/gdp, inflation, credit to the private sector/gdp, total liquid liabilities, total stocks/shares traded and total stock market capitalization were sourced from the Central Bank of Nigeria (CBN) statistical bulletin. The structural break unit root test revealed that all the variables are stationary at their first difference except for inflation that was stationary in its level form; the bound test cointegration analysis established the existence of long run relationship among the variables. The ARDL revealed that financial development negatively and insignificantly affected economic growth in Nigeria during the period of study.

References

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Oladotun Olaniran. 2018. \u201cNew Insights into Financial Sector Development and Economic Growth Nexus in Nigeria\u201d. Global Journal of Human-Social Science - E: Economics GJHSS-E Volume 18 (GJHSS Volume 18 Issue E6): .

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Issue Cover
GJHSS Volume 18 Issue E6
Pg. 21- 31
Journal Specifications

Crossref Journal DOI 10.17406/GJHSS

Print ISSN 0975-587X

e-ISSN 2249-460X

Keywords
Classification
GJHSS-E Classification: FOR Code: 910103
Version of record

v1.2

Issue date

August 23, 2018

Language
en
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This paper examined the relationship between financial sector development and economic growth in Nigeria. The paper used the Principal Component Analysis (PCA), Autoregressive Distributed Lag Model (ARDL),Structural Break Test and the Pairwise Granger Causality Test (PGC) to examine the effect of financial development on economic growth in Nigeria and to establish which theory holds for Nigeria between the demand-following and the supply-leading theory. Annual time series data between 1981 and 2016 was used for the study. Data on real gross domestic product, broad money supply/gdp, inflation, credit to the private sector/gdp, total liquid liabilities, total stocks/shares traded and total stock market capitalization were sourced from the Central Bank of Nigeria (CBN) statistical bulletin. The structural break unit root test revealed that all the variables are stationary at their first difference except for inflation that was stationary in its level form; the bound test cointegration analysis established the existence of long run relationship among the variables. The ARDL revealed that financial development negatively and insignificantly affected economic growth in Nigeria during the period of study.

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New Insights into Financial Sector Development and Economic Growth Nexus in Nigeria

Oladotun Olaniran
Oladotun Olaniran
Aderajo Oluwatosin Mary
Aderajo Oluwatosin Mary

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