Financial Liberalization and Nigerian Economic Growth: 1990-2018

Abstract

This study examined the Effect of Financial Liberalization on Nigerian Economic Growth (1990-2018) using secondary data from Statistical bulletin of Central Bank of Nigeria. The research work selected Nigeria as its sample and used the ECM to test the effect of the independent variables (Foreign direct investment, Interest rate, Trade openness, Foreign portfolio investment, Currency exchange rate Aggregate savings) on the dependent variable, economic growth (proxy by Gross Domestic Product). The study found that financial liberalization had negative and insignificant effect on economic growth of Nigeria. The study therefore recommends among others that Government should aim at creating conditions which make private investment attractive, avoid drastic policy reversal and implement appropriate interest rate policies.

Financial liberalization, remittances and economic growth in Nigeria (1990–2018)

“…This also suggests that the economy has not been able to leverage on the benefits that financial openness confers to stimulate economic activity in the country. However, the result is in tandem with those obtained by Orji et al (2015) and Omopintem and Chukwu (2019) where financial liberalization is found to have a depressing effect on economic growth in Nigeria. Similar findings are obtained by Anetor (2019) and Olaniyan (2019) in Nigeria and Adeel-Farooq et al (2020) in 5 ASEAN countries on the link between financial development and economic growth.…”

“…Bekaert et al (2005) use equity market and capital account liberalization to see if financial liberalization would improve economic growth across countries, and they establish that both measures of financial liberalization increase economic growth across the countries. However, studies by Sulaiman et al (2012) over the period 1987, and by Omopintem and Chukwu (2019 between 1990 and 2018 in Nigeria confirm negative effects of financial liberalization on economic growth. Similarly, Orji et al (2015) find that financial development has a negative impact on economic growth in Nigeria between 1986 and 2011.…”