Investigating Finance-Growth Nexus: Further Evidence from Nigeria

OYEBOWALE, Adeola and KARLEY, Noah Kofi (2018). Investigating Finance-Growth Nexus: Further Evidence from Nigeria. International Journal of Economics and Finance, 10 (9), p. 121.

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Official URL: http://www.ccsenet.org/journal/index.php/ijef/arti...
Link to published version:: https://doi.org/10.5539/ijef.v10n9p121
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    Abstract

    This study investigates the influence of financial sector development on economic growth in Nigeria during the period 1982 to 2015. As such, the study obtained annual secondary data from the Central Bank of Nigeria statistical bulletins and World Bank financial database. The empirical model for this study examines growth in savings, growth in exchange rate, growth in government expenditure, growth in stock market capitalization, growth in credit to private sector, growth in gross capital formation, growth in trade openness and growth in broad money on economic growth in Nigeria. The multiple regression output reveals that growth in government expenditure and growth in gross capital formation are statistically significant on economic growth in Nigeria at 1% and 10% respectively under the period under investigation while other regressors in the model prove to be statistically insignificant. VAR test shows that there is considerable short-run causality running from lags of regressors to economic growth in Nigeria except for lag 1 of growth in exchange rate and lag 2 of growth in credit to private sector. The granger causality test reveals the existence of bi-directional causality between financial sector development and economic growth in Nigeria during the period under investigation. Hence, this study supports the ‘feedback hypothesis’ view on finance-growth. Based on these empirical results, this study recommends effective channeling of funds to the private sector and autonomy of the Central Bank of Nigeria in the use of monetary policy tools.

    Item Type: Article
    Uncontrolled Keywords: 1402 Applied Economics; 1501 Accounting, Auditing and Accountability; 1502 Banking, Finance and Investment
    Identification Number: https://doi.org/10.5539/ijef.v10n9p121
    Page Range: p. 121
    SWORD Depositor: Symplectic Elements
    Depositing User: Symplectic Elements
    Date Deposited: 10 Dec 2019 16:01
    Last Modified: 10 Dec 2019 16:01
    URI: http://shura.shu.ac.uk/id/eprint/25054

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