Financial Liberalization On Economic Growth In Nigeria:- Onuoha, Sarah J

ABSTRACT

The study focus on the impact of financial liberalization and economic growth in Nigeria spanning from 1981 to 2018. The objective of the study were to investigate the impact of financial liberalization on economic growth in Nigeria and to ascertain a sustainable long run relationship between financial liberalization and economic growth in Nigeria. The study employed Johansoncointegration test and error correction mechanism to evaluated research objectives. Thus, revealed that; credit to private sector has a positive but insignificant impact on economic growth in Nigeria, exchange rate and interest rate have a positive and significant impact on economic growth in Nigeria and there exists a sustainable long run relationship between financial liberalization and economic growth in Nigeria. Based on the findings the study recommended that; the stability of the economy should first be taken into consideration before implementing financial liberalization measures. Strong macroeconomic policies should be pursued to maintain and stabilize the economy. The policy towards interest rate should be made such that savings would be stimulated thereby placing more funds in the hands of banks to intermediate to investors seeking funds. Also, lending rate should be reasonable so as not to deter investors to borrow to embark on viable investment projects. Government should avoid depreciation in the value of the nation's currency (Naira) and also maintain stability in the exchange rate.