Department of economics joseph ayo babalola university, ikeji arakeji, osun state, nigeria email. Effect of financial sector development on manufacturing output growth in nigeria 19862012. Financial sector reforms refers to the process or change in the components of the financial sector i. This gives nigerian financial sector, hence the banking sector a sound environment in which the banks and other financial sector actors performed well even during the recent economic down turn. Raphael1 department of economics, obafemi awolowo university, ileife, nigeria aremo a. It generates local savings, which in turn lead to productive investments in. Abstract this study examines the effect of financial sector reforms on the nigerian economic growth. Financial sector reform has no significant impact on financial sector development in nigeria. The nigerian financial system consists of the formal sector bank and nonbank financial institutions and the informal sector savings and loan association, local money lenders, etc. Consultation will be closed on 5 july 2014 draft financial sector development policy and strategy 20142019 revised 1. Do financial and trade openness lead to financial sector. Pdf this study tested the relationship between financial development and economic.
Impact of financial sector development on economic growth. The project is comprehensive and contained detailed analysis of nigeria financial sector development. Introduction in a developing economy, such as nigeria, financial sector development has been. The financial sector has been liberalized in nigeria. Government led development was the ruling economic development paradigm example in nigeria up to the 4th quarter of 1986. The impact of financial sector development on nigeria economic growth between 19812016. A vector autoregression analysis 19802010 risikat oladoyin s. Using the ols, the study shows that financial sector development did not. H o1 there is no significant relationship between financial sector development and economic growth in nigeria. Pdf we investigate the effect of financial sector development on the economic growth of nigeria with secondary data covering the period. Using a battery of econometric tests, this paper explores the long run relationship between financial inclusion and economic growth in nigeria between 1981 and 2014.
The country is an active member of regional integration arrangements. The impact of oil on nigerias economic policy formulation preamble economic policy is the actionstatement of the government pertaining to particular sectors of the economy, describing the intended objectives and how to achieve them. The making finance work for africa partnership is an initiative to support the development of african financial sectors. H a1 there is significant relationship between financial sector development and economic growth in nigeria.
These inefficiently and severely limit the contribution of nigerias financial sector development to economic growth. The results showed that the financial sector development indicators have long run relationship with economic growth. Despite the development in the financial sector, the economy showed no marked improvement salami. However, despite the growth record of banks and nonbank financial institutions in nigeria, and financial liberalization policy, the nigeria economic growth is sluggish. A developed financial sector is a major tools for developing an economy. Effect of financial sector development on manufacturing. The essence of emphasis on the development of the nigerian financial sector is in the theory of financial repression which posits that efficient utilization of resources via a highly organized, developed and liberal financial system enhances economic growth. Impact of financial sector development on the nigerian. Impact of financial sector development on nigeria economic. The model adapts the financial sector development measures used in king and levine 1993 as predictors of. The test was conducted at 5% significant level, the result and other estimates are presented in table 4.
The world bank group is engaged in three global mandates in the financial sector. The nigerian financial system central bank of nigeria. Pdf the paper examines the relationship between the financial sector development indices and economic growth in nigeria with a view to determine the. The study used ardl model for the analysis for robust policy recommendations. Regulatory impact on mobile money and financial inclusion. Financial inclusion entails access of the populace to financial services to tackle poverty, improve welfare and general standard of living. It highlights differences among the 4 countries and their financial regulatory environment. In view of this evidence, we recommend that the simultaneous opening of trade and finance is a more guaranteed way of ensuring improved financial development in nigeria. Sectoral linkages of financial services as channels of economic developmentan inputoutput analysis of the nigerian and kenyan economies andreas freytag, susanne fricke pages 3644.
The aggregation of production output from these sectors reflects the growth level in the nigerian economy and can be used as a yardstick to judge economic. Pdf financial sector development and economic growth. It seeks to know the impacts of the sector in the nigerian economy. Financial sector, development, money market, capital market, economic growth.
This study examines the impact of financial sector reforms on the economic growth and development of nigeria. It further examines different regulations that have influenced the development of financial inclusion through the use of the mobile financial services in the 4 countries. The institutions are regulated by the central bank of nigeria cbn, federal ministry of finance, nigeria deposit insurance corporation. The afdbs econsultation on its financial sector development policy and strategy have your say.
Financial sector developmenteconomic growth nexus american. Causality also runs from stock market development, interest rate, banking sector development and recapitalization to financial development in nigeria. The result showed that there is a substantial positive effect of financial development on economic growth in nigeria. The financial sector reforms and their effect on the nigerian. Relevance of financial sector development on real sector. Due to the influence of the activities in the financial sector on the. Pdf the influence of financial sector development and. Our global mandate on financial depth and stability emphasizes the sustained development of financial institutions and markets, and the mitigation of financial crises. Public sector accounting is used by all organizations which are not privately owned and operated, but which are established, run and financed by the government on behalf of the public. Financial sector development and economic growth in. Nigeria public sector governance reform and development. By the powers of the central bank of nigeria, the whole economy and especially the financial sector is being regulated and overseen.
Financial sector development takes place when financial instruments, markets, and intermediaries work together to reduce the costs of information, enforcement and transactions. Financial sector reform had been adopted by the nigerian government as a part of their economic reform program. Overview of the nigerian financial sector and economy. We are a unique platform for african governments, the private sector, and development partners to coordinate financial sector development interventions across the continent, avoiding duplication and maximizing developmental impact. This study focuses on the nigerian industrial sector to examine the relevance of financial sector development on real sector productivity in the 21st century. Ratings for the public sector governance reform and development project for nigeria were as follows. Evidence from nigeria, authorabiola john asaleye and lawal adedoyin isoha and festus femi asamu and henry inegbedion and ogadimma chukwubueze arisukwu and. Dauda department of economics university of lagos, akoka, lagos kayode o. Do financial and trade openness lead to financial sector development in nigeria. Pdf effect of financial sector development on economic growth. Financial sector development policy and strategy 20142019. It seeks to know the impacts of the sector in the nigerian economy and whether the sector has been able to achieve its main objective of intermediation. Overall, the financial system is not effectively supporting real sector development and is currently not in a position to fulfill its potential as a propeller of economic growth and development. Pdf financial development and economic growth in nigeria.
Fsdi 2 financial sector development indicators comprehensive assessment through enhanced information capacity the project the foundation a clearinghouse with analytically robust measures and new data the financial sector development indicators. Financial sector reform in nigeria had been started with the deregulation of the rates of interest. Macroeconomic context the republic of ghana is west africas second largest economy and has a population of about 25. A solid and wellfunctioning financial sector is a powerful engine behind economic growth. Section3describes the data and empirical methodology used. Financial regulations and the nigerias banking sector. The nigerian financial sector, like those of many other. Financial development, economic growth, indicator, reforms and nigeria 1. Through this reform program the government intended to liberalize the financial sector and to ease the entry into the banking sector. This report is a comprehensive research of financial services industry in nigeria. The first two chapters of the report feature the country profile by giving general information on nigeria and by thoroughly studying its economic state, including key macroeconomic indicators and their development trends. This study examines the impact of financial sector development and economic growth in nigeria. The institutions are regulated by the central bank of nigeria cbn, federal ministry of. The study examines the effect of financial sector reform on economic growth in nigeria over the period of 27 year 19862012.
Financial sector development and economic growth in nigeria. Countries with well developed financial institutions tend to grow faster. Sustainable economic development to be proactive in providing a stable framework for the economic development of nigeria through the effective, efficient and transparent implementation of monetary and exchange rate policy and management of the financial sector core values meritocracy leadership learning customer focus. Pdf financial development, manufacturing sector and. The financial sector could not contribute meaningfully to the growth of the economy olu, 2009. The impact of financial development on economic growth in. This study also does not consider effects of financial intermediation on economic development using credit to private. Nigeria public sector governance reform and development project english abstract. The granger causality test showed that financial development promotes economic growth, but there is evidence of. Makinde department of economics university of lagos, akoka, lagos abstract this study examines the nexus between financial sector development and poverty reduction in. The role of financial globalization and financial sector development in nigeria the financial system is conglomerate of all financial system within an economy comprising the ndic, sec, money and capital markets, financial institutions, the central bank as the regulation authority. Financial sector development and economic growth in nigeria adelakun, o. Public sector consists of organizations where control lies in the hand of the public, as opposed to private owners, and whose objectives involves the provision of services, where profit is not a primary.
This goes to show that the financeled growth hypothesis is valid in nigeria only in the. The paper examines the relationship between financial sector development and economic growth in nigeria. Nnanna 2004 examined financial sector development and economic growth in nigeria. Volume 1 overview and macrofinancial environment covers the executive summary, overview of the financial system and macrofinancial issues.
The private sector as culprit and victim of corruption in. The effect of financial sector reforms on nigerias. The nigerian financial sector, like those of many other less developed. Pdf financial sector development and macroeconomic stability. In view of the above, as consolidated model for financial regulation was reoriented in nigeria. Through globalization the nigerian economy has been sustained through the different sectors in the economy comprising the oil and gas sector, the telecommunication sector, and the agricultural. Basically, the banking sector and the nonbank institutions make up the financial system in nigeria which is responsible for the development of economic growth in the country. Pdf financial development and economic growth nexus in nigeria. Impact of financial sector development on the nigerian economic.
Nigerias financial sector in an effort to foster competition strengthen the. Gabriel department of economics, obafemi awolowo university, ileife, nigeria. I am among many who feel that africa has an unprecedented opportunity for sustained economic growth and poverty reduction. An empirical assessment of financial sector development. Section4presents and discusses the empirical results. The effect of financial sector reforms on nigerias economic growth awoyemi, s.
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