FINANCIAL SECTOR REFORMS AND GROWTH OF THE NIGERIAN ECONOMY
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The objective of this paper is to assess the financial deepening thesis and its
contribution to growth following the era of economic reforms in Nigeria. The
study covered a period of thirty-three years (1970-2002), both years inclusive,
in the analysis. Based on the standard Solow growth model, we have used the
OLS estimation technique and the Error Correction Model to empirically
investigate the proposition. In addition, the conventional financial
development indicators, we adopted a new set of indicators to measure financial
depth/development. The innovation of this study is the inclusion of some
variables designed to capture the effects of globalisation on financial
development in Nigeria. Our basic results suggest that financial reform policies
have been beneficial and as well brought about some costs to the financial
development of the economy. While monetary depth, depth of financial
intermediation and overall financial depth are indices of benefits; interest rate
and financial asset-deepening are indices of costs. In addition, there is no
empirical support for financial-development-induced economic growth.
Keywords
H Social Sciences (General), HB Economic Theory, HC Economic History and Conditions