FINANCIAL SECTOR PERFORMANCE AND ECONOMIC GROWTH IN NIGERIA 2000 - 2022

Abstract

Countries with efficient financial system have the tendency to grow faster and easily achieve a sustainable economic growth over time. An ex-poste facto research design is involved in this study to examine the relationship between financial sector development and economic growth in Nigeria. In this study, Real gross domestic product (GDP) was used to measure economic growth as the dependent variables while liquidity ratio (LR), capital adequacy ratio (CDR) and interest rate spread (IRS) were adopted as the financial development indices. The study sourced secondary data on these variables from the Central Bank of Nigeria (CBN) statistical bulletin of various issues and employed the Error Correction Model (ECM) to ascertain the direction of causality between the dependent and independent variables. The results showed that the financial sector development variables used in this study exerted positive and significant impact on economic growth in Nigeria hence the conclusion that efficient financial development is a good determinant of economic growth and any step taken by the Nigerian government towards developing her financial sector will leave a profound impact in facilitating the rate of economic growth in Nigeria.  The study therefore recommended that it will take strengthening financial regulations, improving financial infrastructure and enhancing financial inclusion to keep improving Nigerian economy through financial sector development.