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Financial Liberalization and Economic Growth in Nigeria: An Empirical Evidence


  • Anthony Orji

    (Department of Economics, University of Nigeria, Nsukka, Nigeria,)

  • Jonathan E. Ogbuabor

    (Department of Economics, University of Nigeria, Nsukka, Nigeria)

  • Onyinye I. Anthony-Orji

    (Department of Economics, University of Nigeria, Nsukka, Nigeria.)


The liberalization thesis has generated a lot of debate in theoretical and empirical literature. In this paper we construct an index of financial liberalization from 1981 to 2012 to investigate its impact on economic growth in Nigeria using the McKinnon–Shaw framework. The ordinary least squares methodology and cointegration analysis are adopted in the study. The result reveals that financial liberalization (FINDEX) and private investment (PINV) have significant positive impact on economic growth in Nigeria. However, real lending rate (LDR) proved to be negatively related to economic growth in Nigeria within the period under review. We therefore conclude that the monetary authorities and policy makers in Nigeria need to support the liberalization process by formulating complementary policies and financial sector reform measures that will help in strengthening the impact of the liberalization process on the economy and also ensure that the benefits of the liberalization exercise is maximized.

Suggested Citation

  • Anthony Orji & Jonathan E. Ogbuabor & Onyinye I. Anthony-Orji, 2015. "Financial Liberalization and Economic Growth in Nigeria: An Empirical Evidence," International Journal of Economics and Financial Issues, Econjournals, vol. 5(3), pages 663-672.
  • Handle: RePEc:eco:journ1:2015-03-05

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    References listed on IDEAS

    1. Antonios Adamopoulos, 2010. "Financial development and economic growth. An empirical analysis for Ireland," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 3(1), pages 75-88, July.
    2. OZTURK, Ilhan, 2008. "Financial Development And Economic Growth: Evidence From Turkey," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(1), pages 85-98.
    3. Abu-Bader, Suleiman & Abu-Qarn, Aamer, 2005. "Financial Development and Economic Growth: Time Series Evidence from Egypt," MPRA Paper 1113, University Library of Munich, Germany.
    4. Abu-Bader, Suleiman & Abu-Qarn, Aamer, 2005. "Financial Development and Economic Growth: Time Series Evidence from Egypt," MPRA Paper 1113, University Library of Munich, Germany.
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    1. repec:spr:fininn:v:3:y:2017:i:1:d:10.1186_s40854-017-0070-0 is not listed on IDEAS

    More about this item


    Financial Liberalization; Lending Interest Rate; Private Investment; Economic Growth;

    JEL classification:

    • B26 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Financial Economics
    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies


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