IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 7 NO. 3 2022
DOI: https://doi.org/10.56201/ijefm.v7.no3.2022.pg13.30

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Dynamics of Financial Development and Economic performance in Nigeria

Duruechi, Anthony H. Ph.D

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Abstract

This work examined financial development and economic performance in Nigeria spanning the period 1995-2021. The objective of the study was to determine the effect of financial development on economic performance in Nigeria. Market capitalization – GDP ratio, broad money supply – GDP ratio, credit to private sector – GDP ratio and bank credit – deposit ratio were the dimensions of financial development considered which constituted the independent variables; while Gross Domestic Product (GDP) was used to proxy economic performance. The secondary data for the study were sourced from Central Bank of Nigeria (CBN) statistical bulletin and was analyzed using the vector error correction mechanism (VECM). The results of the analysis showed the existence of long run relationship between financial development and economic performance but with no significant impact. Also revealed on individual note was the fact only gross domestic product (gdp) lagged one period and market capitalization to gross domestic product ratio (mcap/gdp), had significant impact on economic performance in Nigeria in the long run. These outcomes, led to the conclusion that financial development drives economic performance but with no significant impact in Nigeria. It was then recommended that Financial institutions should be brought closer to the people in order to further deepen the provision of financial services in Nigeria.

keywords:

Financial Development, Dynamics, Economic Performance

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