Open AccessThe Impact of Inflation on Financial Sector Development: Evidence from Nigeria
Author(s) -
Udoma J. Afangideh,
Tuwe Soro Garbobiya,
Farida Bello Umar,
Noris Suryana Usman
Publication year - 2020
Publication title -
international journal of economics and finance
Language(s) - English
Resource type - Journals
eISSN - 1916-9728
pISSN - 1916-971X
DOI - 10.5539/ijef.v12n2p56
Subject(s) - cointegration , economics , inflation (cosmology) , financial sector development , estimation , financial sector , monetary economics , broad money , macroeconomics , carry (investment) , distributed lag , short run , real gross domestic product , finance , monetary policy , econometrics , physics , management , theoretical physics
This paper examines the Impact of inflation on financial sector development in Nigeria using quarterly data from 2002-2017. Financial sector development is proxied using money supply as a share of GDP (M2/GDP).The Auto-Regressive Distributive lag (ARDL) model is employed to carry out the estimation given the weakness of the Engle-Granger residual-based cointegration technique to test the long-run and short-run effects of the impacts of inflation on financial sector development. The results of the estimation reveal that there is a positive and statistically significant relationship between inflation and financial sector development in Nigeria. There is need to test for threshold effects of inflation on financial development in Nigeria.