Financial Dualism, the Informal Sector and Economic Growth: An Econometric Investigation of the Nigerian Evidence
Journal Title: International Journal of Empirical Finance - Year 2015, Vol 4, Issue 7
Abstract
This study empirically examined the impact of the informal financial sector on economic growth in Nigeria from 1981-2013. The stationarity of the variables in the model were first tested via the Augmented DickeyFuller (ADF) and Phillip Perron (PP) unit root tests and results indicate that all variables were integrated in the order of I (1). Having confirmed the stationarity of the variables (GDPPC, DFIND, INSEC, RINTR, and TSAV),the analyses was pushed further to determine the long-run equilibrium relationship between the variables in the model by using the trace statistics test and the maximum eigenvalue test of the Johansen multivariate cointegration test after the order of linear deterministic trend. The informal financial sector impacts negatively on gross domestic product per-capita in Nigeria. Other variables that impact negatively on GDP are real interest rate, degree of financial depth while total savings has a positive but insignificant relationship. A major policy recommendation which drawn from the above findings is that the linkage between the formal and informal sectors in Nigeria should be strengthened towards full elimination of dualistic market. Deposit money banks and the monetary authority should evolve policies aimed at reaching the unbanked informal sector agents, especially the rural households and the urban informal production units. This will deepen the financial sector and assist in mobilizing the much needed savings that will engender investment and growth in the economy.
Authors and Affiliations
Ebele P. Ifionu, Reginald C. Ibe
Keywords
Related Articles
- EP ID EP27221
- DOI -
- Views 309
- Downloads 13
The Effect of Market Share on a Firm’s Profit Ability: A Study of Selected Commercial Banks in Nigeria
The aim of this study was to examine the relationship between market share and profitability of the banking sector in Nigeria. The study involved ten banks listed on the Nigerian Stock Exchange (NSE). Secondary data we...
Paucity of Funds and Small Scale Businesses in Rural Areas: Evidence from Oyo State of Nigeria
Small scale businesses occupy a place of pride in virtually every country of the world. They have been recognized to be the main engine of economic growth in developing economies like Nigeria. Despite the various benef...
A Study on Currency Trading In India-INR Vs USD
A large part of the workforce, and growing every day, is originally from India. India one of the second largest populations in the world, they have a lot to offer in terms of jobs. The sheer number of IT workers makes...
Capital Structure Performance and the Determinant Factors in Nigeria 1985-2015
The study focused on empirical investigation of the determinants of Capital Structure and how it affects the firm performance in Nigeria using variables such as return on equity, return on asset and total return on asse...
Stock Exchange Volatility Transmissions between Turkey and the Major Financial Centers
In the last thirty years, volatility modeling in financial time series has drawn considerable attention in the literature of financial econometrics. The workhorse model of volatility has been the ARCH model and its gene...