Effect Of Financial Sector Development On The Economic Growth Of Nigeria

ABSTRACT

This empirical study examined the effect of financial sector development on the economic growth in Nigeria 1993-2016. The study made use of secondary data, sourced for a period of 24 years. The ordinary least squares multiple regression analytical framework was used in the analysis. Financial deepening was proxied by broad money supply/GDP ratio, alongside market capitalization/GDP ratio and private sector credit/GDP ratio, while real gross domestic product was used to measure economic growth. The results revealed that market capitalization and private sector credit has a positive effect on economic growth while financial deepening (broad money/GDP) had a positive and insignificant effect on economic growth of Nigeria.  Consequently, it was recommended among other things that Nigeria should place greater emphasis on financial sector development with special focus on capital markets development to ensure economic growth. 

TABLE OF CONTENTS

Title Page ﾿ i

Declaration ﾿ ii

Certification ﾿ iii

Dedication ﾿ iv

Acknowledgements ﾿ v

Table of Contents ﾿ vi

List of Tables ﾿ ix

Abstract ﾿ x

CHAPTER 1: INTRODUCTION

1.1 Background to the Study ﾿ 1

1.2 Statement of the Problem ﾿ 3

1.3 Objectives of the Study  ﾿ 4

1.4 Research Questions ﾿ 4

1.5 ﾿ Research Hypotheses ﾿ 5

1.6 ﾿ Significance of the Study  ﾿ 5

1.7 ﾿ Scope of the Study  ﾿ 6

1.8 ﾿ Limitations of the Study ﾿ 6

1.9 Definition of Terms ﾿ 6

CHAPTER 2: REVIEW OF RELATED LITERATURE

2.1 Conceptual Framework ﾿ 8

2.1.1 ﾿ Concept of Financial Development ﾿ 8

2.1.2 Overview of the Nigerian Financial System ﾿ 12

2.1.2 ﾿ Central Bank of Nigeria ﾿ 15

2.1.3 Commercial Banks ﾿ 17

2.1.4 Nature of Deposit Money Banking In Nigeria ﾿ 18

2.1.5 ﾿ Overview of the Nigerian Capital Market ﾿ 20

2.1.6 Nigerian Security and Exchange Commission ﾿ 21

2.1.7 ﾿ Performance of the Financial Sector ﾿ 23

2.1.8 Concept of Economic Growth ﾿ 24

2.1.9 Financial Sector Development and Economic Growth ﾿ 26

2.2 Theoretical Review ﾿ 27

2.3 Empirical Review ﾿ 28

2.4 Summary of Literature ﾿ 33

2.4.1 Gap in the literature ﾿ 34

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research Design  ﾿ 36

3.2 Area of Study ﾿ 36

3.3 Sources of Data Collection ﾿ 36

3.4 Model Specification ﾿ 36

3.5 Description of the Research Variables ﾿ 37

3.5 Method of Data Analysis ﾿ 38

CHAPTER 4: DATA PRESENTATION AND ANALYSIS

4.1 Presentation of Data ﾿ 40

4.2  Data Analysis and Discussion of Results ﾿ 41

4.3  Regression Analysis ﾿ 42

4.3.1 Discussion of Findings and Hypotheses Testing ﾿ 43

CHAPTER 5: SUMMARY CONCLUSION AND RECOMMENDATION ﾿

5.1 Summary of Findings ﾿ 45

5.2 Conclusion ﾿ 45

5.3 Recommendations ﾿ 46

REFERENCES ﾿

APPENDIX