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. 9 NO. 6 2024
DOI: 10.56201/ijefm.v9.no6.2024.pg22.34

---

Effect of Financial Deepening on Nigerian Economic Growth from 1999-2022

Ukoh, Josephine, E. (PhD) and Ibe Prince Chidibere

---

Abstract

The research work examined the effect of financial deepening on the Nigerian economic growth from 1999-2022. The specific objectives of the study assessed the relationship between financial deepening variables such as money supply, and private sector credit, economic development proxied by per capita income over the period. Ex-post facto research design was the adopted research design for this study. The study utilized secondary data from the CBN annual reports and statistical bulletin. The data collected were presented in tables. Hypotheses were tested using ordinary least square (OLS) regression techniques. The study found among other things that revealed that there is a significant and positive relationship between money supply and economic development in Nigeria, there is a significant and positive relationship between private sector credit and economic development in Nigeria. Based on the Findings, the study recommend that Improving access to credit for small and medium-sized enterprises (SMEs) and individuals, especially in underserved rural areas, to stimulate entrepreneurial activities and investment, leading to economic development.

keywords:

Money Supply, Private Sector Credit, and Economic Development

---

References:

Abune, D. N., (2019). Basic econometrics (4e). McGraw-Hill Inc, New York.
Aduni, M.D and Eru, .V. O (2020). Funded contributory pension scheme, financial deepening
and economic growth: What does the evidence say so far about the Nigeria Economy.
CBN Bullion 34 (1), 234-278.
Agu, C. C. & Chukwu, O. J. (2018). Toda and Yamamoto causality tests between bank-based
financial deepening and economic growth in Nigeria. European Journal of Social
Sciences, 7(2), 189-198.
Aleksander, A. & Shouyoung, R. (2019). Stock markets, corporate finance and economic
growth: An overview, world bank economic review,10, 223-239.
Allen, G and Galle, P. (2019). Economic growth and poverty reduction: Evidence from
Kazakhstan, Journal of Asian Development Review, 24(2), 90-115.
Ang, Y. K. (2017). Financial development and economic growth: another look at the evidence
from developing countries, Review of Financial Economics,
Antwi, S., Mills, E. F. A., & Zhao, X. (2018). Impact of macroeconomic factors on economic
growth in Ghana: A Cointegration Analysis. International Journal of Academic
Research in Accounting, Finance and Management Sciences, 3(1),
Ardic, O. P. & Damar, H. E. (2016). Financial sector deepening and economic growth:
Evidence From Turkey www.google.com.ng.
Arestis, A., Demetriades, P. & Luintel, K. (2021). Financial development and economic growth:
The role of stock markets, Journal of Money, Credit and Banking, 33(1), 16 - 41.
Awe, F.A. (2018). The structure of the Nigerian economy. Educational Publishers Ltd, Awka.
Azege, M. (2017). The Impact of financial intermediation on economic growth: The Nigerian
perspective, Lagos State University. Central Bank of Nigeria (2009).
Bashiru, I. (2018). Financial deepening and economic growth: Evidence from Ghana.
University of Cape Coast, M. Sc Thesis submitted to the Department of economic,
University of Cape Coast, Ghana.
Beck, T., Levine, R., & Loayza, N. (2010). Finance and the sources of growth. Journal of
Financial Economics, 58(3), 261–300.
Bencivenga, V.R., & B. D. Smith (2019). Financial intermediation and endogenous growth,
Review of Economic Studies, 58, 195-209.
Berthelemy, J. C. & Varoudakis, A. (2016). Economic growth, convergence clubs, and the role
of financial development. Oxford Economic Papers, New Series, 48(2), 300-328.
Cameron, R. (2007). A Concise economic history of the world: From Paleolithic times to the
present. Oxford University Press, New York.
Central Bank of Nigeria (2007). Capital market dynamics in Nigeria: Structure, transactions
costs and efficiency 1980–2006, Research and statistics
Department, September, 44-
Chimobi, O.P. (2010). The Causal relationship among financial development and economic
growth in Nigeria. International Journal of Economics and Finance, 2(2). 23-34.
Choong, C. K., Z. Yusop, S. H. Law & V.L.K. Sen. (2011). Financial development and
economic growth in Malaysia: The stock market perspective.
Cobbina, P. A. (2022). The impact of financial sector reform in the socio-economic
development of post-independent Ghana. Periscope, 2(1), 19-31.
Demirgüç-Kunt, A. & Huizinga, H. (2010). Determinants of commercial bank interest margins
and profitability: Some international evidence, World Bank economic Review, 13(2),
379-408.
Durning, A. (2012). Steady-state economic by Herman Daly and how much is enough?
Economist journal, 32(324), 99-104.
Eichengreen, A. (2020). Growth is good for the poor. Journal of economic growth, 7(3), 195-
Ekeocha. (2020). Financial development and economic growth in Turkey: Further evidence on
the causality issue, Economic Research paper no. 00/27, December.
Esso, L. J. (2020). Co integration and causality between financial development and economic
growth: Evidence from ECOWAS countries. Journal of Economics and International
Finance, 2(3), 036-048.
Fisher, S. (2021). The importance of financial markets in economic growth: memo, the brazilian
mercantile and futures exchange, Citigroup, Campos do Jordao, Brazil.
Ghani, M. J. (2022). Money, interest and banking in economic development. Baltimore: Johns
Hopkins University Press.
Guryay, E., & Tuzel, B. (2017). Financial development and economic growth: Evidence from
Northern Cyprus, International Research Journal of Finance and Economics, Issue
8.http://www.cenbank.org/OUT/SPEECHES/2004/Govadd-6Jul.pdf.
IMF (2010). World Economic Outlook, IMF Database, October. http://www.imf.org
Ireland, P. N. (2014). Money and growth: an alternative approach. American Economic Review,
March, 47-65.
Jalil, A., Abu, W. N., & Shahbaz, M. (2020). Financial deepening and growth: a positive,
monotonic relationship? Empirical evidences from South Africa. Retrieved from
http://mpra.ub.uni-muenchen.de/27668/.
Kanu, S. I. & Ozurumba, B. A. (2023). Migrant’s remittanges and economic growth in sub
Saharan Africa: Evidence from Nigeria, Ghana and South Africa. Interdisciplinary
Journal of Contemporary Research in Business, 4(10) 534-550.
Karrimo, A. F. & Ogbonna, S. S. (2017). Information technology, financial deepening and
economic growth: Some Evidence from a fast growing emerging economy. Journal of
Economics and International Finance, 2(2), 28-35.
King, R. G., & Levine, R. (2019). Finance and growth: Schumpeter might be right. Quarterly
Journal of Economics, 108, 713–737.
Levine, R. (2002). Bank-based or market-based financial systems: which is better? Journal of
Financial International, 11(4), 398-428.
Levine, R. (2010). Bank-based or market- based financial system: which is better? Carlson
school of Management, University of Minnesota Working Paper
Levine, R. (2017). Financial development and economic growth: Views and agenda. Journal of
Economic Review, 35, 668-726.
Luqman, P. E. (2019). Financial development and economic growth. World Development, 23,
433–448.
McKinnon, R. I. (1973). Money and capital in economic development.Washington, DC:
Brookings Institution.
Michael, A. (2012). Financial development and economic growth: Is Schumpeter right? British
Journal of Economics, Management and Trade, 2(3), 265- 278.
Mohar, E.G. (2019). The financial systems role in resource mobilization and investment: An
analysis of financial deepening in Nigeria's financial sector.
Moore, B.J (2016). Inflation and financial deepening journal of development Economics,
January/February, 125- 133.
Ndebbio, J.E. (2019). Financial deepening , economic growth and development: Evidence
from selected Sub-Saharan African countries. African Economic Research
Consortium, Nairobi. Research Paper 142, August.
Neusser, K., & Kugler, M. (1998). Manufacturing growth and financial development: Evidence
from OECD countries. Review of Economics and Statistics, 80(4),
Nguena, C. L., & Abimbola, T. (2018). Financial deepening dynamics and implication for
financial policy coordination in a monetary union: The case of WAEMU. African
Economic conference 2013 regional integration. Johannesburg, South Africa.
Nwakpa, S. (2022). Financial structures and economic development in India: An empirical
evaluation, RBI Working Paper No.02, Department of economic and policy research,
reserve bank of India, Mumbai.
Nwanna, I.O and Chinwudu, C.F (2016) Effects of financial deepening on economic growth in
Nigeria. Journal of Economic and Finance, 7(4), 11-28.
Nzotta, S.M. & Okereke, E.J. (2019). Financial deepening and economic development in
Nigeria: An empirical investigation African Journal of Accounting, Economics, Finance
and Banking Research, 5(5), 52-66.
Odeniran, S. O. & Udeaja, E .A. (2010).Financial sector development and economic growth:
Empirical Evidence from Nigeria Central Bank of Nigeria Economic and Financial Review,
48(3) September 2010.
Odhiambo, M. (2019). Financial intermediaries versus financial markets: A South African

DOWNLOAD PDF

---

Back