Title:
FINANCIAL DEEPENING AND ECONOMIC DEVELOPMENT IN NIGERIA 1987-2018

Authors:
Ighoroje Ese James, Okoroyibo Elizabeth Eloho, Nigeria

Abstract:

Financial deepening is the ability of financial institutions in an economy to effectively mobilize savings for investment purposes. The main objective of the study is to examine the effect of financial deepening on economic development in Nigeria. The specific objective examines the effect of ratio of money supply to gross domestic product on economic development in Nigeria. It tends to ascertain the effect of ratio of private sector credit to gross domestic product on economic development in Nigeria. It will equally examines the effect of ratio of gross national savings to gross domestic product on economic development in Nigeria. The study employed econometric techniques involving Augmented Dickey Fuller tests for unit roots and the Auto regressive Distributive Lag for the data analysis. The result of our findings indicates that per capita income is an endogenous variable in the explanation of the effect of financial deepening on economic development in Nigeria. The result indicate that ratio of money supply to gross domestic product, ratio of private sector credit to gross domestic product, ratio of gross national savings to gross domestic product and gross capital formation has positive effect on economic development in Nigeria. The study therefore concludes that financial deepening has positive effect on economic development in Nigeria within the period under review. Emanating from the empirically analysis, the following recommendations were made: that Government policies should be geared towards increasing money supply and efficient capital market be enhance to match overall economic development to increasing investors confidence