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The study was undertaken with the objective of examining the causal relationship between financial sector performance and economic development vis-a-vis growth of Nigeria. The variables used were GDP, Human Development Index (HDI), which represents the dependent variables for the two models. For the independent variables, Credit to the Private Sector (CPS) which represents the credit activity of the financial sector; Interest Rate Spread (IRS) which represents the efficiency, competition and concentration of the financial sector; Market Turnover Ratio (TR) which represents the liquidity of the financial sector; Other variables that influence economic growth and development were introduced Inflation (INF) and Total Government Expenditure (GE). Moreover, the study period covers 1996 to 2016 and the data collected within the period was analysed using ADF Test and Granger Causality Test. The results showed that IRS causes economic growth which conforms to the supply leading hypothesis theory; but GDP causes financial sector performance through the Credit to Private Sector (CPS), which means the more the economy grows financial sector performance through its credit allocation function increases. This conforms to the demand following hypothesis theory. However, the overall financial sector performance couldn't facilitate effective economic growth vis-à-vis economic development in Nigeria. Thus, regulatory bodies of the financial sector should set or implement monetary policy program that would be favourable for the efficient operations of financial institutions.
Research Paper (undergraduate) from the year 2019 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, grade: 4.60, , course: Banking and Finance, language: English, abstract: The objectives of this study includes to examine the effects of banking sector reforms on bank performance, savings, investments, developments of the Nigerian Banking System and Economic Growth. The banking sector is without no doubt a very essential part of the economy of a nation and any reforms carried out in it extend to other parts of the economy representing a transformational moment for the economy and its people. So it remains a nationwide challenge that the Nigerian banking sector and it’s reforms haven’t been able to significantly support the long-term financial needs of the real sector or facilitate the growth of the Nigerian economy The Augmented Dickey-Fuller (ADF) Test and The Phillip-Perron Test were used to test for stationarity of the variables, while the Johansen co-integration test was employed to indicate the existence of a long-run relationship among Gross Domestic Product—which acted as the Economic Growth proxy, Commercial Bank’s Capital, Commercial Bank’s Credit, and Number of Commercial Bank Branches which acted as the other variables. Secondary data was sourced from Commercial Bank Statistics, Central Bank Of Nigeria Bulletins, Nigeria Bureau Of Statistics, Statistical Bulletins for the period of 1998-2017. Conclusively, there was a positive and significant relationship betweenEconomic Growth and Banking Sector Reforms in the long run, but a negative relationship between Economic Growth and Financial Sector Reforms in the short-run. It was recommended that the government should ensure political and macroeconomic stability as the activities in all other sectors are affected by them, and that people are enlightened on the benefits of banking sector reforms so that they don’t take opposing actions against the goal of reforms.
Research Paper (postgraduate) from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, , language: English, abstract: The ongoing financial crisis has reinforced the importance of capital in the industrial development and economic growth of a country. In the last two years, industries have closed down owing to lack of capital occasioned by the global financial meltdown. From America, London, other European countries, Asia and Africa, governments have had to intervene in other to bail out some ailing industries and forestall total collapse of the economy. These show the importance of credit either from bank or any other means to industries. Recognizing the importance of capital in economic growth, Mackinnon and Shaw (1973), outlined the procedures for strengthening the financial sector of an economy so as to enable it play the all important role of providing capital for industrial development. Among the basic explanations for this is that the financial sector serves to reallocate funds from the supply side, given their investment opportunities, to the demand side with a shortage of funds. Thus, an economy with well-developed financial institutions will be better able to allocate resources to industries that yield the highest returns. The manufacturing sector is a catalyst to the modern economy and has a many dynamic benefits that are crucial for economic transformation, (Loto, 2005). The manufacturing sector is a leading sector. It helps to increase productivity in relation to import substitution, export expansion, creating foreign exchange earning capacity, raising employment and per capital income which according to Loto, (2005), widens the scope of consumption in dynamic patterns. Ogwuma, (1995) asserts that the manufacturing sector promotes the growth of investment at a faster rate than any other sector of the economy as well as wider and more efficient linkages among different sectors.
This Financial Sector Stability Assessment on Nigeria discusses the macroeconomic performance and structure of the financial system. Although Nigerian economy experienced both domestic and external shocks in recent years, the economy continued to grow rapidly, achieving more than 7 percent growth each year since 2009. The performance of financial institutions has begun to improve, though some of the emergency anti-crisis measures continue to be in place. However, the regulatory and supervisory framework has gaps and weaknesses. In sum, the Nigerian economy has emerged from the banking crisis, and has the potential to enjoy an extended period of strong economic growth.
This book presents a holistic picture of Nigeria's financial services landscape. This includes identifying service providers and regulatory bodies, understanding consumer behaviour, and examining the unique challenges faced by Nigerian financial institutions. The book presents up-to-date research on recent developments and regulatory changes within Nigeria's financial sector, as well as future considerations for how financial services and financial inclusion can play a crucial role in the country's sustainable economic growth. Combining academic analysis with practical insights, the book takes readers through Nigeria's key financial services providers, regulators, consumers, marketing strategies and challenges. A core focus throughout is on financial inclusion and the opportunities associated with reaching financially underserved or excluded populations, demonstrating how increasing financial access at a country-wide level aligns with global goals of reducing inequalities and promoting growth. It will have interdisciplinary appeal to scholars, students and professionals working in finance, economics, business, public policy and development studies.
The book is made up of 5 chapters covering aspects of financial sector development and economic growth in Nigeria. The book documents past financial sector development modeling efforts of some renowned scholars in a way that will be widely accessible to policy makers, policy advisers and those with research interests in financial sector development.
The growth of financial system, as the central hub of every economy is paramount for economic development. The reformation of the financial sector is the bedrock for building a formidable, transparent and efficient financial system that could supports the mobilisation of domestic and foreign savings for investment. Conversely, it deepens and broadens financial intermediation, and enforces strict regulations with prudential guide for increase in business activities. Thus, the aim of the study is to investigate the causal relationship between financial sector reforms and economic growth in Nigeria. The study also established the impact of financial sector reforms on economic growth to ascertain if financial sector reforms in Nigeria promote growth. To establish this, financial sector reforms is measured with the ratio of banking sector domestic credit, domestic credit to the private sector and Capital flow proxied with foreign direct investment while economic growth is captured with Per capita GDP. Using generalised linear regression method, with quarterly time series data that spans the periods 1981Q1 to 2010Q4, the following findings on granger causality test were noticed; (a) bidirectional relationship between banking sector domestic credit and per-capita GDP; (b) unidirectional causation running from foreign direct investment to per-capita GDP and; (c) unidirectional causation running from per-capita GDP to domestic credit to the private sector. However, from the findings, banking sector domestic credit and foreign direct investment are the major policy variables that can be adjusted for economic growth. Finally, the estimated regression results show that the explanatory variables accounted for approximately 63.45 percent variation in economic growth. Hence, financial sector reform promotes economic growth in Nigeria.
How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for the years 1974 and 2004. It is then used to study the international data, using cross-country interest-rate spreads and per-capita GDP. The analysis suggests that a country like Uganda could increase its output by 140 to 180 percent if it could adopt the world's best practice in the financial sector. Still, this amounts to only 34 to 40 percent of the gap between Uganda's potential and actual output. Charts and tables.
A collection of nine papers, each representing an application of the rate of economic growth as an analytical device to a specific economic problem, provides models toward the general development of a theory of growth.