IMPACT OF FINANCIAL DEEPENING INDICATORS ON ECONOMIC GROWTH IN NIGERIA, 1986-2020
Keywords:
Financial Deepening, Economic Growth, Broad Money Supply, Ratio of Private Sector Credit, Market Capitalization, Commercial Bank Asset in Nigeria.Abstract
The study examined the impact of financial deepening indicators on economic growth of Nigeria, 1986 – 2020 proxies by (GDP). The objectives of the study were to; ascertain the impact of broad money supply on GDP in Nigeria, determine the impact of ratio of private sector credit to GDP in Nigeria, examine how market capitalization impacts on GDP in Nigeria and Investage the impact of commercial banks asset on GDP in Nigeria. The study adopted ex – post facto research design. It was adopted because it establishes the relationship between dependent and independent variables using already recorded events or historic data which the researcher cannot manipulate it latter. The analytical tools used for the study were; unit root test, descriptive statistics and ordinary least square, the results found out that broad money supply, ratio of Private sector credit to GDP, market capitalization and commercial banks asset has positive and significant impact on economic growth in Nigeria. The conclusion drawn from this study is that the impact of financial deepening on economic growth in Nigeria following the supply-leading hypothesis has impacts on economic growth in Nigeria . The study recommended that the CBN should be made more effective in its monetary management by making all financial markets organized so as to accentuate the effects of monetary policy variables like broad money supply. This promotes real GDP in Nigeria. The government should encourage the Central Bank of Nigeria to build a conducive and enabling environment for friendly interest rates so that prospective investors can increase their investment and raise the nation’s production capacity. Central bank of Nigeria should always do proper evaluation and monitoring of the distribution of such financial services, aimed at ensuring it gets to the targeted sectors or individuals, thereby stimulating economic growth in Nigeria.
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