Tax Incentives, Financial Development and Economic Growth in Nigeria, 1990 - 2023

Prof Fabian Mmaduabuchi Emerenini; Young G Nwala; Ezebunwa N Justice

doi:10.56201/ijefm.v10.no11.2025.pg117.130

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Tax Incentives, Financial Development and Economic Growth in Nigeria, 1990 - 2023

Prof Fabian Mmaduabuchi Emerenini, Young G Nwala, and Ezebunwa N Justice

Abstract

This study analyzed tax incentives, financial development on the economy of Nigeria. From the period of 1990 to 2023. The dependent variable was real gross domestic product while the independent variables were Investment allowance as a proxy for Tax Incentives measured, Domestic credit to bank as a proxy for financial development, Tax Credit as a proxy for Tax Incentives and Private Credit to GDP as a proxy for financial development. The data sourced from the CBN Statistical bulletin 2023 edition and world development indicators (WDI). The variables were stationary at first difference and had long run relationship hence the adoption of the Autoregressive Distributed Lag (ARDL) Model estimation. The ARDL result revealed that tax credit has positive and direct relationship with economic growth of Nigeria. However, only tax credit was significantly related to growth in the short run analysis. While domestic credit to bank, investment allowance and private credit to GDP all have negative effect on growth in the economy, even though they exert positive relationship. The study conclude that tax incentives have a significant positive impact on financial development and economic growth in Nigeria. The study also conclude that financial development has a negative impact on economic growth in Nigeria. The study suggest that tax incentives are important drivers of economic growth in Nigeria. It was recommended that the government should prioritize the provision of tax incentives to encourage financial development and economic growth. Tax incentives such as tax holidays, tax credits, and tax deductions can be provided to businesses and individuals to encourage investment and economic activity.

Keywords

Tax IncentivesFinancial DevelopmentEconomic GrowthAutoregressive

References

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Tax Incentives, Financial Development and Economic Growth in Nigeria, 1990 - 2023

Abstract

Keywords

References

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