Open AccessFinancial Development, Financial Openness and Economic Growth in Nigeria
Author(s) -
Christian E. Bassey,
Okoiarikpo Benjamin Okoi,
Ikpe Kingsley Imoh
Publication year - 2021
Publication title -
international journal of engineering and management research
Language(s) - English
Resource type - Journals
eISSN - 2394-6962
pISSN - 2250-0758
DOI - 10.31033/ijemr.11.3.39
Subject(s) - financial sector development , financial system , finance , economics , openness to experience , business , monetary economics , financial sector , psychology , social psychology
This study examined the impact of financial development and financial openness on economic growth in Nigeria between 1981 and 2019. This was done through the use of the Auto-Regressive Distributed Lag (ARDL) model. In doing this, the ratio of credit to the private sector to the GDP and broad money to narrow money were used as measures of financial development and financial openness respectively. The study found that financial development has a positive and insignificant impact on economic growth in Nigeria in the long and short-run. The study also found that financial openness has a negative and insignificant impact on economic growth in Nigeria in the long-run. The results of the study further revealed that simultaneous existence of financial development and financial openness has an insignificant but positive impact on economic growth in Nigeria in the long-run. Based on the findings, the study recommended that the CBN should increase its efforts towards the regulation and supervision of the financial sector to reduce the incidence of financial distress. The study also recommended that efforts to develop the mortgage and insurance sector and the capital market should be intensified through regulatory improvements, improvements in the instruments in use in the market as well as public enlightenment programs to increase awareness of the potentials of the mortgage, insurance and capital markets. The final recommendation made by the study is that more restrictions should be placed on the inflow of capital in and out of the country to guard against sudden capital flow reversals.