Impact of Credit and Financial Deepening on Economic Growth in Nigeria

Cajetan C. Anuforo Kenechukwu K. Ede Corresponding Author

doi:10.56201/jafm.vol.12.no6.2026.p412.429

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Impact of Credit and Financial Deepening on Economic Growth in Nigeria

Cajetan C. Anuforo Kenechukwu K. Ede Corresponding Author

Abstract

The sole aim of this study was to investigate the impact of credit and financial deepening on economic growth in Nigeria from 1990 to 2021. We employed measures of credit, such as bank credit to the private sector % of GDP and domestic credit to the private sector % of GDP to measure credit. In addition, we measured financial deepening with the ratio of broad money and gross domestic product (M2/GDP); and economic growth with real gross domestic product ; while we control for inflation rate , interest rate and exchange rate . In the cointegration result, we discovered that cointegration exists between credit, financial deepening and economic growth in Nigeria. Also, we discovered from the ARDL bound test that long-run relationship exists between credit, financial deepening and economic growth in Nigeria. The result of the ARDL entailed that long-run relationship exists between credit, financial deepening and economic growth in Nigeria. In the short-run, the coefficient of the error correction model entailed that the speed of adjustment from the short run to the long-run will be corrected by the magnitude of 68%. Thus, we recommend that the government through CBN as well as the corporate governance body of the deposit money banks in Nigeria should improve the conditions of issuing loans and credits to businesses, individuals and households in Nigeria so as to enhance the level of credit provision to the firms which will in turn lead to job creation, output maximization, full employment of factors of production and increased economic growth in Nigeria.

Keywords

CreditFinancial Deepening and Economic Growth

References

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Impact of Credit and Financial Deepening on Economic Growth in Nigeria

Abstract

Keywords

References

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