Financial Deepening Series and Economic Growth Nexus in Nigeria: Cointegration Approach, 1981-2019
- Post by: airjournals
- June 30, 2021
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Financial deepening is the process that involves developments in quantity, quality and efficiency of financial intermediation services in the financial system. This process involves the relationship of many activities and institutions and possibly associated with economic growth. However, it implies the level of development and innovation of traditional services the objective of this study is to measure the long run relationship existing between financial deepening and economics growth nexus in Nigeria. The study used two ways eager granger residual based of the ordinary least square approach. Result reveals that there is a long run relationship existing between financial deepening series and economic growth nexus in Nigeria, this result creates a headway for the estimation of error correction. Result from the analysis reveals that error correctional analysis proves that the variable converges to long run equilibrium. However, it will take the shock emanating from the convergence one year, seven months and four days to return the error caused by the convergence to equilibrium. it was concluded that financial deepening series and economic growth had a longing relationship in Nigeria Therefore a macroeconomic variable as contained in the financial depth called financial development has been seen to have a serious positive implication on economic activities in Nigeria. If financial depth, inclusion and financial developments are to be maintained, Economy will grow. However, efforts should be directed to reduce the extent of convergence to long run equilibrium as identified in this study. This can only be done by proper management of both monetary and fiscal policies of the government so as to have an endemic growth function.
Keywords: Financial deepening, Economic Growth, Gross Domestic Savings
1Okoye, Gregory Onuora Ph.D. and 2Ezema, Clifford Anene Ph.D.
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