ABSTRACT 

The study is situated against the backdrop of the sluggish growth rate of output in the economy and the important role the financial sector plays in driving economic growth in Nigeria. The principal objective of the study is to investigate the link between financial sector development and economic growth in Nigeria from 1981-2016. The study, therefore sought to investigate the effect of financial sector development on economic growth as well as investigate the nature of causal relationship between financial sector development and economic growth in Nigeria using cointegration tests to establish the long run relationship and granger causality test to determine the direction of causality between financial sector development and economic growth.Data from Central Bank of Nigeria statistical bulletin were used in the analysis. The study established that there exist a long run relationship between financial sector development and economic growth in Nigeria. The study recommends among other things that: The central bank must liaise with commercial banks and financial institutions in other to arrive at an equilibrium interest rate that clears the market for loanable funds.