ABSTRACT

 This study examined impact of financial deepening on the living standard in Nigeria within the sample period from 1990 to 2018. The broad objective of the study was lo examine the impact of financial deepening and standard of living in Nigeria. The methodology of the study was the cointegration and vector error correction approach. The variables used in the study include; money supply ratio to GDP (MS/GDP), Credit to Private Sector (CPR/GDP), and Per capita income (PCI) as the explanatory variables while gross domestic product {GDP) was employed as the dependent variable. The Data on these variables were sourced from the Central Bank of Nigeria (CBN) statistical bulletin volume 29, 2018. The unit root result revealed that none of the variables were stationary at level, but at first differencing, all the variables became stationary. The Johansen Cointegration test revealed that there is a long run relationship among the variables employed in the study. The result of the VECM showed indicates that there is a positive relationship between M/GDPand GIN! index. Equally, the result indicates a negative relationship between PC/ and GIN/ index also the relationship between CPR/GDP and GIN/ index were not statistically significant. The R2 shows that 82% of the changes in the dependent variable, are as a result of the changes in the explanatory variable. The result of the BreuschGodfrey Serial Correlation LM Test shows that there is no serial correlation in the model. Therefore, the research recommends that; the monetary authority should ensure that a wellarticulated policy that will ensure that the supply of money circulate to the various sector in the economy, this will boost investment and as such output will increase leading to the growth in the economy. There is the need to review the policies on Interest rate to ensure that funds/loans are an obtained at a realizable interest rate, the study revealed that the higher the interest rate, the lower the investment, the lower the output and as such the lower the growth of the economy and subsequently, a drop in the standard of living