Finance and Economic Growth of Nigeria
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2018, Vol 9, Issue 1
Abstract
The study examined the relationship between finance and economic growth in Nigeria, and the direction of causality. The study made use of data spanning through 1980 – 2015 and various econometric analysis such as Augmented Dickey-Fuller (ADF) unit root test, Johansen Co-integration test, Error Correction Model (ECM) and the Granger causality test. Gross Domestic Product (GDP), proxied for economic growth, was included as the dependent variable, while finance, proxied by Credit to Private Sector (CPS), served as independent variable, with Lending Rate (LR) as a control variable. The results showed a positive, long-run and statistically significant relationship between finance and economic growth. The study also revealed a unidirectional causal relationship from finance to economic growth. It was therefore concluded that government and monetary authorities should develop and implement policies that will improve activities of financial institutions in order to ensure economic growth. It was also suggested that, financial institutions should make the accessibility to credits by private sector less stringent in order to encourage borrowings for investment, and ultimately, enhancing economic growth.
Authors and Affiliations
Tomola M. Obamuyi, Bukola A. Faloye
Keywords
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- EP ID EP414509
- DOI 10.9790/5933-0901040914.
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