The Effect of Financial Sector Reforms on Nigeria’s Economic Growth

Abstract

This study examines the effect of financial sector reforms on the Nigerian economic growth. It seeks to know the impacts of the sector in the Nigerian economy and whether the sector has been able to achieve its main objective of intermediation, since the sector was highly regulated leading to financial disintermediation which retarded the growth of the economy. Time series data from 1991 to 2012 were used and were gathered from the CBN publications. Augmented Dickey Fuller (ADF) test, Philip Perron Unit root Test, Ordinary least Square Regression have been used. Unit root confirms the stationary of all variables at first difference. Regressions results indicate that Credit to private sector, investments and Prime lending rate have significant positive impact on economic growth of Nigeria. It is recommended among other things that reform policy thrust be geared toward proper reserves management; efficient stock market operation to enable banks put their capital and asset base to full utilization. This way, the financial sector
reforms will be effective and capable of moving the economy forward in a more desired direction.