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Financial Liberalization and Economic Growth in Nigeria: An Empirical Evidence

Author

Listed:
  • 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.)

Abstract

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

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    3. Antonios Adamopoulos, 2010. "Financial development and economic growth. An empirical analysis for Ireland," International Journal of Business and Economic Sciences Applied Research (IJBESAR), International Hellenic University (IHU), Kavala Campus, Greece (formerly Eastern Macedonia and Thrace Institute of Technology - EMaTTech), vol. 3(1), pages 75-88, July.
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    Cited by:

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    2. Amani AZZOUZA, 2021. "The effect of financial liberalization on Malaysian economic growth," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(627), S), pages 19-32, Summer.
    3. Anthony Orji & Christian E. Ugwu & Jonathan E. Ogbuabor & Onyinye I. Anthony-Orji & Lynda C. Nwufo, 2022. "Cash Reserve Ratio and Credit to Micro-, Small and Medium-Sized Enterprises in Developing Economies. Analysis of Transmission Channels Using Nigerian Data," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 1, pages 71-88, February.
    4. Clement Moyo & Pierre Le Roux, 2019. "Interest Rate Reforms and Economic Growth in SADC Countries: The Savings and Investment Channel," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 66(4), pages 507-523, December.
    5. Muhammad Rizwan Nazir & Yong Tan & Muhammad Imran Nazir, 2021. "Financial innovation and economic growth: Empirical evidence from China, India and Pakistan," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 6036-6059, October.
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    10. Moyo, Clement & Le Roux, Pierre, 2018. "Interest rate reforms and economic growth: the savings and investment channel," MPRA Paper 85297, University Library of Munich, Germany.
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    More about this item

    Keywords

    Financial Liberalization; Lending Interest Rate; Private Investment; Economic Growth;
    All these keywords.

    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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