Nexus between Financial Deepening and Economic Expansion in Nigeria

  • Ebierinyo Ayebaemi Akarara, PhD Department of Economics, Niger Delta University Wilberforce Island, Bayelsa State, Nigeria
  • Michael A. Amaegberi, PhD Department of Economics, Niger Delta University Wilberforce Island, Bayelsa State, Nigeria

Abstract

This study was carried out in order to test the competing theories about the relationship
between finance and growth as they apply to Nigeria, look into the effects of non-bank
financial institutions on economic growth and determine whether there is a long-term
connection between financial deepening and economic growth. Using the Ordinary Least
Square (OLS) approach, Augmented Dickey-Fuller test, Johansen co-integration test,
Granger causality test, and Error Correction Mechanism, quarterly series from CBN
statistics bulletin 2021 and IMF data were used. The findings showed that economic growth
is directly impacted by financial deepening through private sector credit, market
capitalisation ratio, total bank assets, total insurance premium and Foreign Direct
Investment (FDI). However, all of these factors are very negligible other than FDI. The
findings also showed that financial deepening and economic growth have a long-term
association. The expansion of the economy was not considerably impacted by nonbank
financial organisations. According to the study’s findings, there is a direct causal link
between financial depth and economic development in Nigeria, which supports the
‘‘demand-following hypothesis.’’ The researchers thus, urged the government and other
decision-makers to embrace both measures that strengthen the financial system and those
that encourage economic growth.

Author Biographies

Ebierinyo Ayebaemi Akarara, PhD, Department of Economics, Niger Delta University Wilberforce Island, Bayelsa State, Nigeria




Michael A. Amaegberi, PhD, Department of Economics, Niger Delta University Wilberforce Island, Bayelsa State, Nigeria





Published
2022-09-04
How to Cite
AKARARA, PHD, Ebierinyo Ayebaemi; AMAEGBERI, PHD, Michael A.. Nexus between Financial Deepening and Economic Expansion in Nigeria. SAU JOURNAL OF MANAGEMENT AND SOCIAL SCIENCES, [S.l.], v. 7, n. 3, p. 13-27, sep. 2022. Available at: <https://journals.sau.edu.ng/index.php/sjmas/article/view/819>. Date accessed: 30 sep. 2022.