EFFECT OF FINANCIAL SECTOR DEVELOPMENT ON ECONOMIC GROWTH IN NIGERIA (1998-2024)

Authors

Keywords:

Financial Sector Development, Economic Growth, Stock Market Capitalization, Credit to Private Sector, Financial Depth, ARDL, Nigeria

Abstract

This study examined the effect of financial sector development on economic growth in Nigeria over the period 1998–2024. An ex-post facto research design was employed, and annual data on real gross domestic product (RGDP), stock market capitalization (SMC), credit to the private sector (CPS), and financial depth (FND) were obtained from the Central Bank of Nigeria Statistical Bulletin and World Bank databases. After conducting descriptive statistics, correlation analysis, unit root tests, normality tests, and multicollinearity diagnostics, the Autoregressive Distributed Lag (ARDL) model was used as the main estimation technique, with lag selection based on the Akaike Information Criterion. The long-run results indicate that stock market capitalization has a negative and significant effect on RGDP, credit to the private sector has a positive and significant effect on RGDP, and financial depth has a negative and significant effect on RGDP. The study concludes that financial sector development in Nigeria exerts mixed and asymmetric effects on economic growth, depending on the specific component of the financial system considered. It recommends that regulatory authorities strengthen the real-sector orientation of the capital market, that the Central Bank of Nigeria promote targeted credit interventions to productive sectors, and that monetary and fiscal policies be better coordinated to ensure that financial deepening supports sustainable growth rather than macroeconomic instability

Dimensions

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Published

2026-10-21

How to Cite

Iyodo, B., Idoko, R., Lawal, A., & Ojonugwa, A. V. (2026). EFFECT OF FINANCIAL SECTOR DEVELOPMENT ON ECONOMIC GROWTH IN NIGERIA (1998-2024). FUDMA Journal of Business Management, 4(2), 253-278. https://doi.org/10.70882/fjbm.2026.v4i2.136

Issue

Vol. 4 No. 2 (2026): FUDMA Journal of Business Management

Section

Articles
Copyright & Licensing

Copyright (c) 2026 Babayaro Iyodo, Reuben Idoko, Abubakar Lawal, Ameh Victor Ojonugwa (Author)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

How to Cite

Iyodo, B., Idoko, R., Lawal, A., & Ojonugwa, A. V. (2026). EFFECT OF FINANCIAL SECTOR DEVELOPMENT ON ECONOMIC GROWTH IN NIGERIA (1998-2024). FUDMA Journal of Business Management, 4(2), 253-278. https://doi.org/10.70882/fjbm.2026.v4i2.136