An Impact Assessment of Financial Sector Development on Economic Growth in Nigeria, (1986 – 2018)

Abstract

This study was carried out to determine and assess the impact of the financial sector on economic growth within the context of the Nigerian economy using gross domestic product, interest rate, Market capitalization and bank deposit as variable. Ordinary least square, Co-integration and ARDL are used as methodology and the study finding shows positive impact between GDP and BND. Thus an increase of (1.4%) in Bank deposit (BND) ceteris-paribus increased GDP by about (9.8%). Similarly, the coefficient of MCP (6.7399) also indicates a positive impact between GDP and the Market Capitalisation (MCP), increased GDP by about (7.3%).From long-run analysis, GDP at lag 1 has negative but statistically significance, BND has positive but insignificant and from the short run analysis ARDL GDP at lag 1 has negative but statistically significant, BND has positive but insignificant while at lag 1 it is negative and insignificant, interest rate is positive and insignificant likewise MCP but at lag 1 it is negative and insignificant MFE has positive but insignificant. The study recommended that, the monetary authority should give priority and monitor interest rate to ensure that it is relatively stable, Moreover, increase money in circulation that will boost bank deposit