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The objective of this paper has been is to examine empirically, the implications of financial development for economic growth in Nigeria. Time series data covering the period between 1990 and 2011 from Nigeria. The cointegration technique with its implied Error Correction Mechanism (ECM) was applied. This commenced with the ADF unit root test, followed by the Johansen cointegration test. The Overparameterize and Parsimonious ECM was next and this was followed by the Vector Error Correction, diagnostic tests and Cholesky variance decomposition. The variables included Real Gross Domestic Product, Financial deepening which is a ratio of money supply to Gross Domestic Product, liquidity ratio, interest rate and credit to the private sector. Financial sector development has not significantly improved private sector development. The minimum capital base and liquidity ratio has improved the level of economic growth in Nigeria. The Johansen cointegration test suggests a long run relationship among the variables and the significant ECM which is negatively signed supports the long run relation among the variables and indicates a satisfactory speed of adjustment. Although financial sector development has on the aggregate significantly improved the level of economic performance, the credit to the private sector did not play significant role. The result recommends, amongst others, that further development of the financial sector should be oriented towards the development of the private sector
VICTOR E. ORIAVWOTE, SAMUEL J. ESHENAKE. (2014) An Empirical Assessment of Financial Sector Development and Economic Growth in Nigeria, International Review of Management and Business Research, Volume 3, Issue 1.
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