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Relevance of Financial Sector Development on Real Sector Productivity: 21st Century Evidence from Nigerian Industrial Sector

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  • Stephen Oluwafemi Adeusi
  • Olufemi Adewale Aluko

Abstract

This study focuses on the Nigerian industrial sector to examine the relevance of financial sector development on real sector productivity in the 21st century. The model adapts the financial sector development measures used in King and Levine (1993) as predictors of industrial sector production output. Estimating the model with Ordinary Least Square (OLS) method, the study reveals that there is a strong linear relationship between the financial sector and real sector because the coefficient of multiple determinations is relatively high; thus suggesting that financial sector development is crucial for real sector productivity.

Suggested Citation

  • Stephen Oluwafemi Adeusi & Olufemi Adewale Aluko, 2015. "Relevance of Financial Sector Development on Real Sector Productivity: 21st Century Evidence from Nigerian Industrial Sector," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(6), pages 118-132, June.
  • Handle: RePEc:hur:ijarbs:v:5:y:2015:i:6:p:118-132
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    References listed on IDEAS

    as
    1. Neelesh Gounder, "undated". "2012-11 Financial development and economic growth in Fiji: New empirical evidence," Discussion Papers in Economics economics:201211, Griffith University, Department of Accounting, Finance and Economics.
    2. Jokipii, Terhi & Monnin, Pierre, 2013. "The impact of banking sector stability on the real economy," Journal of International Money and Finance, Elsevier, vol. 32(C), pages 1-16.
    3. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 717-737.
    4. Aliyu Mamman & Yusuf Alhaji Hashim, 2013. "Impact of private sector credit on the real sector of Nigeria," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 3(5), pages 105-116, May.
    5. Jordan Shan & Jianhong Qi, 2006. "Does Financial Development 'Lead' Economic Growth? The Case of China," Annals of Economics and Finance, Society for AEF, vol. 7(1), pages 197-216, May.
    6. repec:usm:journl:aamjaf00811__93-113 is not listed on IDEAS
    7. Arestis, Philip & Demetriades, Panicos O, 1997. "Financial Development and Economic Growth: Assessing the Evidence," Economic Journal, Royal Economic Society, vol. 107(442), pages 783-799, May.
    8. Aizenman, Joshua & Pinto, Brian & Sushko, Vladyslav, 2013. "Financial sector ups and downs and the real sector in the open economy: Up by the stairs, down by the parachute," Emerging Markets Review, Elsevier, vol. 16(C), pages 1-30.
    9. Nicholas M. Odhiambo, 2009. "Interest rate reforms, financial deepening and economic growth in Kenya:an empirical investigation," Journal of Developing Areas, Tennessee State University, College of Business, vol. 43(1), pages 295-313, September.
    10. Siti Muliana Samsi & Zarinah Yusof & Kee-Cheok Cheong, 2012. "Linkages Between the Real Sector and the Financial Sector: The Case of Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 8(Supp. 1), pages 93-113.
    11. N M Odhiambo, 2008. "Financial Development in Kenya: a Dynamic Test of the Finance-led Growth Hypothesis," Economic Issues Journal Articles, Economic Issues, vol. 13(2), pages 21-36, September.
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