Financial Deepening and Economic Growth Nexus in Nigeria: Supply-Leading or Demand-Following?

Karimo, Tamarauntari Moses; Ogbonna, Oliver E.

doi:10.3390/economies5010004

Cited by 39 publications

(34 citation statements)

References 19 publications

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“…Another reason adduced for this inverse relationship may be the weak monetary policy by the apex bank over time and weak framework. The finding agrees with the research outcome by Ajao and Festus (2011); Igbinosa and Orobator (2016); Partar (2016); Etale and Ayunku (2017) and Karimo and Ogbonna (2017). It however disagrees with the researches of Iyiegbumiwe (2005); Agbada and Odejimi (2013); Ndugbu et al (2015); and Okoro et al (2017).…”

Section: Empirical Analysissupporting

confidence: 81%

“…This study adapts the empirical models of Igbinosa and Orobator (2016), Karimo and Ogbonna (2017), Etale and Ayunku (2017). The functional form of the model is: This study adapts the empirical models of Igbinosa and Orobator (2016), Karimo and Ogbonna (2017), Etale and Ayunku (2017). The functional form of the model is: = , , ,…”

Section: Model Specificationmentioning

confidence: 99%

“…They suggested that appropriate policies be employed by the federal government of Nigeria that would strengthen and deepen the money market. Karimo and Ogbonna (2017) investigated financial deepening and economic growth nexus in Nigeria with regard to supply -leading or demand -following for the period 1970 to 2013. The study used the Toda -Yamamoto augmented granger causality test.…”

Section: Introductionmentioning

confidence: 99%

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Money Market Instruments and Financial Deepening in the Nigeria Emerging Economy

2019

RJFA

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The study examined money market instruments and financial deepening in the context of an emerging economy like Nigeria. The study used money market instruments like Treasury bills (TBs), Bankers' acceptances (BAs), Certificate of deposits (CDs) and Commercial papers (CPs). The ratio of money supply to gross domestic product was a proxy for financial deepening. Time series data was generated from Central Bank of Nigeria Statistical Bulletins in the period 1981 to 2016 for the study. Preliminary tests including Augmented Dickey Fuller (ADF), unit root test and descriptive statistics were carried out before the main econometric procedures were employed to analyze the data. The econometric procedures carried out include granger causality test, the ordinary least square multivariate regression method; the Johansen co-integration and the error correction mechanism methods (ECM). The study found strong effect of money market instruments on financial deepening in Nigeria in the long run. Granger causality test result revealed no directional causality relationship between Treasury bills and financial deepening, while bi-directional causality exists between Certificate of deposits and financial deepening; unidirectional causality exists between Bankers' acceptances, Commercial papers and financial deepening. The study recommends that policies that promote trading in international money market instruments like Bankers' acceptances should be strengthened by the Federal government of Nigeria to deepen the financial market as well as enhance the competitiveness of the Nigerian money market in the global market. This should consequently translate to financial deepening in Nigeria and improvement of the economy at large.

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Section: Empirical Analysissupporting

confidence: 81%

Section: Model Specificationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Money Market Instruments and Financial Deepening in the Nigeria Emerging Economy

2019

RJFA

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“…Bhatti (2015) indicated positive relationship between financial depth and economic growth in Pakistan. Karimo and Ogbonna (2017) confirmed that the growth-financial deepening nexus in Nigeria follows the supply-leading hypothesis. However, Adusei (2013) explored evidence that financial development undermines economic growth in Ghana.…”

Section: Literature Reviewsupporting

confidence: 52%

Financial Efficiency and Economic Growth in Thailand

Luangpituksa¹

2019

JMAA

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This paper investigates the relationship between financial efficiency and economic growth in Thailand with annual time series during 1991-2015. Financial efficiency measures: (i) bank efficiency in intermediating savings to investment, as measured by the net interest margin (the accounting value of bank's net interest revenue as a share of its average interest-bearing assets) (IMARGIN) and lending-deposit spread (ISPREAD); and (ii) operational efficiency measures, such as overhead costs to total assets; NONILIA while the percentage change of real GDP per capita (real gross domestic product [RGDP]) represents economic growth. The Augmented Dickey-Fuller Test (ADF) of the stationary test shows that all data are stationary at the first difference except ISPREAD is stationary at the second difference. Since all variables are not integrated at the same order, there are no short run and long run relationship between financial efficiency variables and economic growth. The pairwise Granger causality result with 1 lagged length selected by Akaike Information Criterion (AIC), shows that no causality between financial efficiency variables and economic growth and vice versa; and supports the "neutral hypothesis". However, there is a one-way causality linkage between two financial efficiency indicators, lending and deposit interest rate spread, and the ratio of overhead costs to total assets. In other words, the banks' profit from interest spread is used to improve bank efficiency, such as hiring more staff, increase number of branches, and automatic teller machines (ATMs) to improve bank services. Therefore, financial institutions should provide financial services to response customers' needs as the commercialization and modernization of the economy.

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“…The Granger causality test showed the presence of unidirectional relationship among variables. [27] examined the direction of causality between financial deepening and economic growth in Nigeria for the period 1970-2013. The study adopted the Toda-Yamamoto augmented Granger causality test and results showed that the growth-financial deepening nexus in Nigeria follows the supply-leading hypothesis.…”

Section: Relevant Literature Reviewmentioning

confidence: 99%

Effect of Financial Deepening on Economic Growth in Nigeria: A Time Series Appraisal (1986-2018)

Nwakobi

Oleka

Ananwude

2019

AJARR

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The influence of financial deepening on the economic growth of any nation cannot be underestimated. To this end, the study evaluated the effect of financial deepening on economic growth in Nigeria over a period of thirty three (33) years: 1986 to 2018. Data were collected from statistical bulletins of the Central Bank of Nigeria (CBN) and factbooks of the Nigerian Stock Exchange (NSE). The model estimation followed the Auto-regressive Distributive Lag (ARDL) approach with the effect estimated in line with the Granger Causality analysis. We found that economic growth in Nigeria is not affected by financial deepening. The study also stated that the level of growth in the economy is what influences the level of development in the banking sector. Nwakobi et al.; AJARR, 7(3): 1-9, 2019; Article no.AJARR.52016 2 and the capital markets to help in the efficient and effective mobilization of resources to accelerate the growth of the Nigerian economy. The insurance sector should not be left out in this regard even though citizens seem not to embrace the need for insurance policies. Impediments to the competition in the banking, insurance and capital market activities should be removed by strict legislation in line with international best practices and participants in the markets be protected as well. Original Research Article

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Financial Deepening and Economic Growth Nexus in Nigeria: Supply-Leading or Demand-Following?

Cited by 39 publications

References 19 publications

Money Market Instruments and Financial Deepening in the Nigeria Emerging Economy

Money Market Instruments and Financial Deepening in the Nigeria Emerging Economy

Financial Efficiency and Economic Growth in Thailand

Effect of Financial Deepening on Economic Growth in Nigeria: A Time Series Appraisal (1986-2018)

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