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Rethinking the Interaction Between Banks and Markets in the Nigerian Financial Architecture

Author

Listed:
  • Augustine C. Arize
  • Ebere Ume Kalu
  • Nelson N. Nkwor

    (University of Nigeria)

Abstract

This paper reexamines the interplay between banks and capital markets in the Nigerian financial system. Using the ARDL/Bounds test cointegration approach and error correction model (ECM) technique on the time-series data obtained from the Central Bank of Nigeria (CBN) for the period 1981-2014, we found a long-run link between bank and market models--a complementary rather than competing association--which suggests a co-evolving development in the Nigerian financial structure. This finding underscores that, for enhanced economic growth, policy makers need to develop actionbased policies for the development of both banks and capital markets in the Nigerian financial system.

Suggested Citation

  • Augustine C. Arize & Ebere Ume Kalu & Nelson N. Nkwor, 2018. "Rethinking the Interaction Between Banks and Markets in the Nigerian Financial Architecture," The African Finance Journal, Africagrowth Institute, vol. 20(1), pages 24-38.
    • Handle: RePEc:afj:journl:v:20:y:2018:i:1:p:24-38
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    More about this item

    Keywords

    Financial Architecture; Financial System; Bank-Based Economy; Market-Based Economy; Bound Test; ARDL; Error Correction Model;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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