Financial Sector Development And Economic Growth In Nigeria

Abstract

One of the most unending debates in economics is whether financial
development causes economic growth or whether it is a
consequence of increased economic activity. The paper empirically
examines the relationship between financial development and
economic growth. In this study, the perceived relationship between
financial development and economic growth is estimated
econometrically using the Ordinary Least Square Estimation
Method (OLSEM). The result showed that there is a substantial
positive effect of financial development on economic growth in
Nigeria. The Granger causality test showed that financial
development promotes economic growth, but there is evidence of
causality from economic growth to the development of financial
intermediaries. Thus, advancement of the financial sector
development, including diversification of financial instruments
should be pursued to facilitate economic development in Nigeria.