Financial Intermediation and Economic Development in Nigeria from 1980-2019

Abstract

The study investigates the relationships between financial intermediation and economic development in Nigeria for a period of 39years ranging from 1980-2019. The analysis utilized a secondary time series data from IMF Global financial development index and World Bank database, while the E-views 10.0 econometric analytical tools were used for analysis of data collected. The results of Augmented Dickey-Fuller (ADF) unit root test conducted uncovers that all the data were stationary at order 1(1). Again,JohanasenCo integration testfor (PVR) and CUSUM test indicates 1 cointegrating equation with the maximum eigenvalue at 5% levels of significance, thus indicates the presence of short and long-run relationships among the variables used for the study, while the result of Granger Causality test further established a bidirectional causality relationship among the variables. Furthermore, the OLS test result reveals the fitness of the model in making informed decisions. The study utilized data from Global financial development index IMF database which includes financial development index (LFDI), financial institution access index (LFIAI), financial institution depth index (LFIDI), financial institution efficiency index (LFIEI), and financial institution index (LFII) to proxy financial intermediation as independent variables, while economic development is proxied with Poverty rate (PVR) as dependent variable.the study recommend that, the key players in the financial institutions frameworks should concentrate more with policies and progrmmes that will enhance more rapid actions to drive bank financial access and efficiency so as to propel rapid economic development, as one of the essential vehicles to reduce or even eliminate poverty rate in Nigeria.