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Modelling Financial Sector Effects On Nigeria’S Real Economy, A Nonlinear Ardl Approach

Author

Listed:
  • Matthew I. Eboreime, PhD

    (Central Bank of Nigeria)

  • Josiah D. Elisha
  • Hannah N. Ude-Abosi

Abstract

The history of the financial sector in Nigeria is characterised by set-backs and reforms which may lead to nonlinear effect on growth. Previous studies predicated on linear models yielded conflicting results on the effect of finance on economic growth. Thus, there is need for further evidenced-based research and to achieve this; the paper employed the recently developed non-linear autoregressive distributed lag (NARDL) methodology. The main objective of the study is to evaluate the existence of asymmetric longrun macroeconomic relationship between financial sector development and economic growth in Nigeria between 1990 and 2015. The findings show that a long run nonlinear or asymmetric cointegration relationship exist between economic growth and two financial proxy indicators (total banking asset to GDP and currency in circulation to GDP) while the outcome for the other indicators were inconclusive

Suggested Citation

  • Matthew I. Eboreime, PhD & Josiah D. Elisha & Hannah N. Ude-Abosi, 2016. "Modelling Financial Sector Effects On Nigeria’S Real Economy, A Nonlinear Ardl Approach," West African Journal of Monetary and Economic Integration, West African Monetary Institute, vol. 16(1), pages 33-62, June.
    • Handle: RePEc:wam:journl:v:16:y:2016:i:1:p:33-62
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    More about this item

    Keywords

    Financial sector; economic growth; nonlinear ARDL; Asymmetric cointegration;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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