Does Financial Liberalization Lead to Poverty Alleviation? New Evidence from Nigeria

Abstract

The study examined anew the empirical question of whether financial liberalization induces poverty alleviation. There is a theoretical expectation that liberalizing the financial market will lead to greater savings mobilization, greater access to credit facilities and poverty alleviation. Using a time-series data spanning 38 years (1980-2018), the study analyzed the effect of financial liberalization on credit availability to the private sector, the manufacturing sector especially the small & medium enterprises and the agricultural sector in Nigeria. The Bounds testing approach to co-integration employed within the framework of Autoregressive Distributed Lag model (ARDL) was used to generate the coefficients. The coefficient of financial liberalization-though positive in all the parameter estimates, it is not significant. This lead us to the conclusion that despite the advantages of financial liberalization, its benefits is yet to bring about significant positive increases or changes in the volume of credit to the private sector and in poverty alleviation. Inferring upon this, we deduced that the continued liberalization of the financial system though indicating a positive long run impact on financial widening (or financial deepening as the case may be), its manifestation on quantum of credit to the private sector and on poverty alleviation is yet to be realized in Nigeria. The study recommended, amongst others, that government should re-think and re-tool the process in ways that will generate stability in the financial system and unleash the potentials of the process to generate greater savings and ultimately greater investment in the real sectors of the economy.

Do county financial marketization reforms promote food total factor productivity growth?: a mechanistic analysis of the factors quality of land, labor, and capital

“…Financial institutions will reduce financial support for agriculture under the effect of both economic profit and risk-taking. In contrast to the above view, as the gap between the return on investment in agriculture and the commercial and industrial sectors closes and the credit conditions in the agricultural sector are optimized, some academics think that the market-oriented reform of financial institutions at this point has contributed to the deepening of inclusive financial services (Muhammad Adnan and Wizarat, 2011;Onuka and Odinakachukwu, 2020). On the other hand, most of the literature on the impact of financial credit on total factor productivity in food has looked at the micro demand side of financial credit constraints and availability.…”