Financial System and Economic Growth in Nigeria

Abstract

The financial system, which is the central nervous system of any economy, is important for the development of any nation. Despite the presence of various banks and other financial institutions in Nigeria, its economy has not attained a satisfactory level of economic growth when compared to other developed nations. The objective of this paper is to examine the relationship between financial intermediation and economic growth in Nigeria. The study used time-series data from 1991 to 2015. data obtained were estimated using Johnson Co-integration test and the Error correction model. Findings revealed that the financial system has a significant impact on economic growth in Nigeria. This study therefore recommends that financial institutions should expand their stocks and assets to ensure better deepening by focusing on the real sector of the company. In addition, regulatory authorities like CBN and SEC need to focus policies such as: financial inclusion that will engender the positive impact of Nigeria’s financial system on its economic growth, using CPS as a measure of financial depth in Nigeria