Financial Intermediation and Private Sector Investment Activities in Nigeria: An Empirical Analysis

Abstract

This study effect of financial intermediation on private investment in Nigeria from 1990 to 2021. This was aimed at ascertaining how SAV for aggregate savings; CPS for aggregate credit to the private sector; and EFI for the efficiency of financial intermediation has stimulate private investment performance in Nigeria. Historical data was collated and estimated employing the ARDL regression technique. The empirical results indicate that both aggregate savings and the efficiency of financial intermediation exert positive impacts on private investment performance in Nigeria, while the effects from aggregate savings and credit to the private sector was negative. But as private sector credit was significant, the positive effect from the efficiency of financial intermediation was not statistically significant. On the basis of the findings of this study, the following recommendations are made: The monetary authorities have to regularly review their monetary policy direction to bring interest rate spread down and increase the efficiency of financial intermediation in the country; Since aggregate savings has been shown to exert positive and significant impact on private investment activities, it is recommended that economic policy makers sustain and improve the current platforms for savings in the country. Most especially, increase the enrollment to the contributory pension scheme.

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