Financial Deepening and Economic Growth in Nigeria: An ARDL Approach

Udoh, B. E.; Jack, A. E.; Prince, A. I.; Ekeowa, K. I. L.; Ndubuaku, V.; Samuel, U. E.

doi:10.13189/ujaf.2021.090413

Financial Deepening and Economic Growth in Nigeria: An ARDL Approach

Authors: Udoh, B. E., Jack, A. E., Prince, A. I., Ekeowa, K. I. L., Ndubuaku, V., Samuel, U. E.

Journal: Journal of Business Research and Statistics (JBRS), ISSN 1694-4356

Citation: JBRS 4(2), 2022-09-07.

DOI: 10.13189/ujaf.2021.090413

PDF: Download full-text PDF

Type: Original Research

Abstract

This research work investigated the impact of Financial Deepening on the Economic Growth of Nigeria (1986-2018), with three specific objectives; examining the impact of broad money supply, credit to the private sector, and monetary policy rate on the economic growth of Nigeria. Tie series data were employed sourced from the Central Bank of Nigeria statistical bulletin of the 2018 edition, the classical least square of multiple regressions with the application of dummy variable to capture the effects of the various Regimes was adopted in analyzing the data. The results show that financial deepening has both short and long-term effects on economic growth, the estimated regression line is significant as confirmed by the f-statistics. Broad money supply to the gross domestic product had a negative and no significant impact on the economic growth of Nigeria, credit to the private sector to the gross domestic product had a negative and non-significant impact on the economic growth of Nigeria, monetary policy rate to the gross domestic product had a positive and significant impact on the economic growth of Nigeria. The unit root test shows that all the variable data have a unit root, the selected processes of financial deepening are the true determinant of economic growth in Nigeria with a high degree of effectiveness in the civilian regime. It is recommended that stringent measures should be taken to enhance the effects of the financial subsector of the economy to foster its role in promoting and sustaining growth in the economy.

Keywords

Financial Deepening, Broad Money, Private Sector, Monetary Policy Rate, Economic Growth

Published by Academic Ink Review Journal. Open Access under CC BY 4.0.