Research on the Impact of Stock Market Development on Real Economic Growth in Nigeria

Nwagu, Ellis Chukwumerije

doi:10.36348/sjef.2020.v04i09.008

Cited by 1 publication

(1 citation statement)

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“…According to Nwaogwugwu (2016), financial intermediation involves the transformation of mobilized deposits liabilities by financial intermediaries such as banks into bank assets or credits such as loan and overdraft. It is simply the process whereby financial intermediaries take in money from depositors and lend same out to borrowers for investment and other economic development purposes (Andrew & Osuji, 2013).…”

Section: Literature Reviewmentioning

confidence: 99%

Financial Intermediation and Economic Growth in Nigeria

Olufemi,

Muritala,

Yusuf

et al. 2024

J. of Law and Sust. Develop.

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Objective: This study examined the impact of financial intermediation on economic growth in Nigeria. The study employed secondary data obtained from the Central Bank of Nigeria statistical bulletin from year 1987 to 2020. Method: The independent variable – Financial intermediation was proxied by credit to private sector, broad money supply, lending rate, market capitalization and total value of shares traded while the dependent variable – Economic growth was proxied by gross domestic product and per capital income. Autoregressive Distributed Lag (ARDL)/Bound testing to co-integration was used to establish the short run and long-run dynamic impact of financial intermediary on economic growth in Nigeria. Results: The study revealed a high speed of adjustment in the short run (Cointeq(-1) = (-0.9995; -0.981099) for the two models respectively. Similarly, for the GDP model, the study revealed that in the long run, credit to private sector (β1 = 0.0121); market capitalization (β4 = 0.05423) and total volume of shares traded (β5 = 1.62669) all established positively significant impact on economic growth in Nigeria at 5% significance level except broad money supply (β2 = - 0.00511) and lending rates (β3 = - 0.14194) which established negatively significant impact on economic growth in Nigeria at 5% significance level. However, for the PCI model, the study revealed that in the long run, credit to private sector (β1 = 0.002216); market capitalization (β4 = 0.095095) and total volume of shares traded (β5 = 1.915620) all established positively significant impact on economic growth in Nigeria at 5% significance level except broad money supply (β2 = -0.008476) and lending rates (β3 = -0.313843) which established negatively significant impact on economic growth in Nigeria at 5% significance level. Conclusion: The study therefore, recommends that management of banks should be encouraged to pursue policies that will deepen the efficient allocation of financial services for economic growth in Nigeria.

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Section: Literature Reviewmentioning

confidence: 99%