EFFECT OF FINANCIAL INTERMEDIATION ON FINANCIAL SECTOR DEVELOPMENT IN NIGERIA

OSAKPAMWAN PROSPER EFIONAYI

Abstract


The study evaluated the effect of financial intermediation on financial sector development in Nigeria. Time series secondary data were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin from 1990 - 2021. The method of data analysis employed in this study includes descriptive statistic, correlation analysis and unit root test. Auto-regressive distributed lag (ARDL) technique was used to evaluate the econometric model. The study found out that total loans and advances of commercial banks do not have significant effect on the contribution of financial sector to gross domestic product; total market capitalization of the stock exchange does not have significant effect on the contribution of financial sector to gross domestic product; and interest rate does not have significant effect on the contribution of financial sector to gross domestic product. The study recommended that regulators should focus on implementing policies and regulations that will make financial institutions more liberal in order to encourage loan disbursement, increase the participation of capital market activities and also make interest rate more appealing in order to boost financial intermediation with a view to influencing the contribution of financial sector development to the gross domestic product of Nigeria.

Full Text:

PDF

References


Adewole, J. A, Dare, F. D., Ogunyemi, J. K. (2019). Implications of financial intermediation on the performance of commercial banks in Nigeria: Financial Markets, Institutions and Risks, 3(4), 94105. http://doi.org/ 10.21272/fmir.3(4). 94-105.

Agbada, A. & Osuji, C. C., (2013). An empirical analysis of trends in financial intermediation and output in Nigeria. Global Journal of Management and Business Research Finance 13(9):19-30.

Aigbovo, O. & Uwubamwen A. E. (2014). Financial system development and economic growth the Nigerian stock market and bank perspective. Asian Journal of Business Management 6(4): 155-172, 2014 DOI:10.19026/ajbm.6.5158.

Andabai, P. W. & Bina, P. A (2017). Empirical investigation of financial intermediation and communication sector growth in Nigeria. Journal of Finance and Economic Research, Vol. 3, No. 2, Sept. www.absudbfjournals.com.

Andrew, O. A & Osuji, C. C. (2013). An empirical analysis of financial intermediation and output in Nigeria. Global Journal Inc (USA) 13(9). 210-216.

Asongu, S. A., & Odhiambo, M. N. (2019). Challenges to doing business in Africa: A systematic review. Journal of African Business, 20(2):259–268.

Bamidele, M. I., Lucas O. E. & Olumuyiwa G. Y. (2018). Financial intermediaries and capital market development in Nigeria. SBE, Vol.21, No.1. ISSN 1818-1228 DOI https://doi.org/10.29117/sbe.2018.0107

Casadas, P. V. (2015). Innovation for financial access and its impact in financial intermediation and poverty reduction. Working Paper # 2015/19.

Central Bank of Nigeria (CBN) (2021). Statistical Bulletin.

Chukwunulu, J. I & Ibenta, S. N. O (2021). Financial innovation and efficiency of financial intermediation in Nigeria. African Journal of Accounting and Financial Research 4(2), 77-87. DOI: 10.52589/AJAFR-MFZIZEEQ.

Emmanuel, I. J. & Nwekemezie, Odo, A. (2019). Effect of financial intermediation on economic development of Nigeria. IOSR Journal of Economics and Finance (IOSR-JEF), Volume 10, Issue 1 Ver. I (Jan. – Feb.2019), PP 23-32 www.iosrjournals.org DOI: 10.9790/5933-1001012332.

Garba, S. B. (2014). Financial sector development and economic growth in Nigeria: An empirical investigation. International Journal of Finance and Accounting, 3(4): 253-265 DOI: 10.5923/j.ijfa.20140304.05.

Goldsmith, R. W. (1969). Financial Structure and Development, New Haven, Coon, Yale University Press.

Gujarati, D. N. & Porter D. C (2009). Basic Econometrics. Fifth edition. Singapore: McGraw-Hill International Edition.

Igbanibo D. S. & Iwedi M. (2015). The intermediation functions of finance companies and economic growth: Issues, theory and empirical evidence from Nigeria. Journal of Finance and Accounting, Vol. 3, No. 3 (2015): 47-56. doi: 10.12691/jfa-3-3-2.

Ilo, B. M., Elumah, L. O. & Sanyaolu, W. A. (2018). Oil rent and financial development: evidence from Nigeria. Ilorin Journal of Finance, 2(1), 152-165.

Imo, G. I. (2014). Impact of financial intermediation on economic development of Sub-Saharan African countries. Unpublished Ph.D thesis submitted to the Department of Banking and Finance, Faculty of Business Administration, University of Nigeria, Enugu Campus in partial fulfilment of the requirements for the award of Ph.D in Banking and Finance.

Iwedi M., Okey-Nwala P. O., Kenn-Ndubuisi J. I. & Adamgbo; S. L. C. (2016). Financial intermediation development and economic growth: Empirical evidence from Nigeria. Business Research Review, Volume 2, Issue 2, December. ISSN 2518-6698

Kamau, D. M. & Oluoch, J. (2016). Relationship between financial innovation and commercial bank performance in Kenya. International Journal of Social Science and Information Technology, II(IV), 576 – 594.

AFIT Journal of Marketing Research Volume 3, No. 1 ISSN: 2756-519X Pages 137-154

Kerlinger, F.N. (1973). Foundations of behavioural research techniques in business and economics eleventh edition. Boston: McGraw Hill Irwin

Murtala, B. U., Siba, D., Ahmad, U. G., Muhammad, R. D., & Ali, U. A., (2015). An empirical study on the relationship between financial intermediation and Economic Growth in Nigeria.

Nnabugwu, O. C. (2021). Effect of financial intermediation on the development of small and medium scale enterprises in Anambra State, Nigeria. International Journal of Innovative Finance and Economics Research 9(3):44-54, July-Sept.

Nwaeze, C., Onydikachi, M. & Nwabekee, C. E (2014). Financial intermediation and economic growth in Nigeria (1992 – 2011). The Macrotheme Review. 3(6), Summer.

Nweze, P. N (2015). An empirical analysis of the relationship between financial sector development and economic growth of Nigerian. International Journal of Social Sciences and Humanities Reviews Vol.5 No.3, September, 2015; p.152 – 161, (ISSN: 2276-8645).

Ogiriki, T. & Andabai, P.W (2014). Financial intermediation and economic growth in Nigeria, 1988 - 2013: A vector error correction investigation. Mediterranean Journal of Social Sciences, Vol 5 No 17. MCSER Publishing, Rome-Italy.

Ogundajo, G. O., Onakoya, A. B., Enyi, E. P. & Siyanbola, T. T. (2019). Financial institutions inter mediation and economic development in Nigeria. Journal of Accounting and Finance in Emerging Economies, 5 (1), 33-46. DOI: 10.26710/jafee.v5i1.723.

Okonji, S. O. & Nnadi K. U. (2018). Financial sector development and Nigerian macroeconomic performance. International Journal of Economics, Commerce and Management United Kingdom Vol. VI, Issue 11.

Onwe, J. C & Adeleye, N. (2018). ARDL empirical insights on financial intermediation and economic growth in Nigeria. Journal of Business & Economic Management, 6(12): 000-000, December. DOI: 10.15413/jbem.2018.0700.

Onwumere, J.U.J (2005). Business and economic research method. Lagos: Don-Vinton Limited. Sepehri, A.; Moshiri, S. (2004). Inflation‐growth profiles across countries: evidence from developing and developed countries. International Review of Applied Economics. 18 (2): 191–207. doi:10.1080/0269217042000186679. S2CID 154979402.

Tchamyou, V. S (2020). Education, lifelong learning, inequality and financial access: evidence from African countries. Contemporary Social Science, 15(1):7–25.


Refbacks

  • There are currently no refbacks.