FINANCIAL DEEPENING AND SELECTED NON-OIL SECTORS GROWTH IN NIGERIA: ARDL ANALYSIS AND VECM
Journal of Economics and Trade,
This paper explores the causal impact of financial deepening over the period 1993Q1–2020Q4 on the contribution of the Wholesale and Retail, Service and Construction sectors to economic growth in Nigeria, using a co-integration research method of Auto-regressive distributed lag (ARDL). Managed for possible effects in these non-oil sectors of crude oil prices and openness to trade, the study identified statistically significant financial deepening to drive long-term and short-term economic growth across the three non-oil sectors. Overall, the results stress Nigeria's financial intermediary system in terms of mobilizing and allocating capital as well as stimulating private sector economic activities in non-oil sectors. Therefore, the establishment of intermediation in the financial sector may be the right strategy for raising the domination of the Nigerian oil industry.
- Financial deepening
- non-oil sectors
- cointegration and VECM
How to Cite
Beck T. Finance and oil: Is there a resource curse in financial development (CentER Discussion Paper No. 2011-017), Tilburg University: Netherlands; 2011.
Ang JB. What are the mechanisms linking financial development and economic growth in Malaysia? Economic Modelling. 2008;25:38–53.
Beck T, Demirguc-Kunt A. Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking and Finance. 2006;30:2931–2943.
Seetanah B. Financial development and economic growth: an ARDL approach for the case of the small island state of Mauritius. Applied Economics Letters. 2008;15:809–813.
Jalila A, Feridun M. Impact of financial development on economic growth: empirical evidence from Pakistan. Journal of the Asia Pacific Economy. 2011;16:71-80.
Uddin GS, Sjö B, Shahbaz M. The causal nexus between ﬁnancial development and economic growth in Kenya. Economic Modelling. 2013;35:701–707.
Beck T, Demirgüç-Kunt A, Maksimovic V. Financial and legal constraints to firm growth: Does firm size matter?’Journal of Finance. 2005;60:137–77.
Beck T, Maimbo SM, Faye I, Triki T. Financing Africa: Through the Crisis and Beyond, World Bank Publications: Washington DC; 2011.
Adeniyi O, Oyinlola A, Omisakin O, Egwaikhide FO. Financial development and economic growth in Nigeria: Evidence from threshold modelling’,Economic Analysis and Policy. 2015;47:11–21.
Nwani C, BasseyOrie J. Economic growth in oil-exporting countries: Do stock market and banking sector development matter? Evidence from Nigeria. Cogent Economics & Finance. 2016;4:1153872.
Samargandi N, Fidrmuc J, Ghosh S. Financial development and economic growth in an oil-rich economy: The case of Saudi Arabia. Economic Modelling. 2014;43:267–278.
Singh T. Financial development and economic growth nexus: a time-series evidence from India. Applied Economics. 2008;40:1615- 1627.
King RG, Levine R. Finance and growth: Schumpeter might be right. The Quarterly Journal of Economics. 1993;108:717–737.
De Gregorio J, Guidotti PE. Financial development and economic growth. World Development. 1995; 23:433–448.
Levine R, Loayza N, Beck T. Financial intermediation and growth: causality and causes. Journal of Monetary Economics. 2000;46:31–77.
Christopoulos DK, Tsionas EG. Financial development and economic growth: Evidence from panel unit root and cointegration tests. Journal of Development Economics. 2004;73:55–74.
Rioja F, Valev N. Finance and the sources of growth at various stages of economic development. Economic Inquiry. 2004;42:127–140.
McCaig B, Stengos T. Financial intermediation and growth: Some robustness results. Economics Letters. 2005;88:306–312.
Habibullah MS, Eng YK. Does financial development cause economic growth? A panel data dynamic analysis for the asian developing countries. Journal of the Asia Pacific Economy. 2006;11:377–393.
Hassan MK, Sanchez B, Yu J. Financial development and economic growth : New evidence from panel data. Quarterly Review of Economics and Finance. 2011;51:88–104.
Skrabic B, Arneric J. Banking sector development in CEE countries: panel data approach. International Journal of Sustainable Economy. 2011;3(3):281-293.
Hondroyiannis G, Lolos S, Papapetrou E. Financial markets and economic growth. Journal of International Financial Markets, Institutions and Money. 2005;15:173–188.
Chang T, Caudill SB. Financial development and economic growth: the case of Taiwan. Applied Economics. 2005;37:1329-1335.
Anwar S, Nguyen LP. Financial development and economic growth in Vietnam. Journal of Economics and Finance. 2009;35:348–360.
Mehrara M, Oskoui KN. The source of macroeconomics fluctuations in oil-exporting countries: a comparative study. Economic Modelling. 2007;24:365–379.
Farzanegan MR. Can oil-rich countries encourage entrepreneurship? Entrepreneurship and Regional Development. 2014;26:706-725.
Kurronen S. Financial sector in resource-dependent economies. Emerging Markets Review. 2015;23: 208–229.
Cevik S, Rahmati M. Searching for the finance-growth nexus in Libya (IMF Working Paper No. 13-92), International Monetary Fund: Washington DC; 2013.
Quixina Y, Almeida A. Financial development and economic growth in a natural resource based economy: Evidence from Angola (FEP Working Papers No: 542) FEP:Porto, Portugal; 2014.
Nili M, Rastad M. Addressing the growth failure of the oil economies: the role of ﬁnancial development. Quarterly Review of Economics and Finance. 2007;46:726–740.
Barajas A, Chami R, Youseﬁ SR. The finance and growth nexus re-examined: Do all countries beneﬁt equally? (IMF Working paper No. 13-130). International Monetary Fund: Washington, DC; 2013.
Kar M, Nazlıoğlu S, Ağır H. Financial development and economic growth nexus in the MENA countries: Bootstrap panel granger causality analysis. Economic Modelling. 2011;28:685–693.
Ben Naceur SB, Cherif M, Kandil M. What drives the development of the MENA ﬁnancial sector?’Borsa Istanbul Review. 2014;14:212-223.
Pesaran M, Shin Y, Smith R. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics. 2001;16:289–326.
Jayaraman T, Choong CK. Growth and oil price: a study of causal relationships in small Paciﬁc island countries. Energy Policy. 2009;37:2182–2189.
Harris R, Sollis R. Applied time series modelling and forecasting. Wiley: West Sussex; 2003.
Narayan PK. The saving and investment nexus for China: evidence from cointegration tests’,Applied Economics. 2005;37:1979-1990.
Brown RL, Durbin J, Evans JM. Techniques for testing the constancy of regression relations over time. Journal of the Royal Statistical SocietyB. 1975;37:149–192.
Bekhet HA, Matar A. Co-integration and causality analysis between stock market prices and their determinates in Jordan. Economic Modelling. 2013;35:508–514.
Abstract View: 299 times
PDF Download: 5 times