IDEAS home Printed from https://ideas.repec.org/p/aby/wpaper/19-014.html
   My bibliography  Save this paper

Financial Reforms and Industrialisation: Evidence from Nigeria

Author

Listed:
  • Oludele E. Folarin

    (University of Ibadan, Ibadan, Nigeria)

Abstract

Nigeria adopted the Structural Adjustment Programme (SAP) in 1986 after the crash in world oil price in the early 1980s. Financial reforms are part of the reforms implemented during the SAP. Since, industrialisation is seen as an engine of growth, we conduct an empirical assessment of the effects of financial sector reforms on industrialisation in Nigeria using an annual time series data over 1981 - 2015. Using an autoregressive distributed lag (ARDL) model, our findings show that financial reforms have a positive and significant impact on industrialisation.

Suggested Citation

  • Oludele E. Folarin, 2019. "Financial Reforms and Industrialisation: Evidence from Nigeria," CEREDEC Working Papers 19/014, Centre de Recherche pour le Développement Economique (CEREDEC).
  • Handle: RePEc:aby:wpaper:19/014
    as

    Download full text from publisher

    File URL: http://publications.ceredec.org/RePEc/aby/aby-wpaper/Financial-Reforms-and-Industrialisation-in-Nigeria.pdf
    File Function: Revised version, 2019
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Tapsoba,Sampawende J.-A. & Kouame,Wilfried Anicet Kouakou, 2018. "Structural reforms and firms'productivity : evidence from developing countries," Policy Research Working Paper Series 8308, The World Bank.
    2. Chete, L. N. & Adeoti, J. O. & Adeyinka, F. M. & Ogundele, O., 2014. "Industrial development and growth in Nigeria: Lessons and challenges," WIDER Working Paper Series 019, World Institute for Development Economic Research (UNU-WIDER).
    3. Burhop, Carsten, 2006. "Did banks cause the German industrialization?," Explorations in Economic History, Elsevier, vol. 43(1), pages 39-63, January.
    4. Folarin, Oludele E. & Asongu, Simplice A., 2019. "Financial liberalization and long-run stability of money demand in Nigeria," Journal of Policy Modeling, Elsevier, vol. 41(5), pages 963-980.
    5. Robert Rowthorn & Ramana Ramaswamy, 1999. "Growth, Trade, and Deindustrialization," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 1-2.
    6. Szirmai, Adam, 2012. "Industrialisation as an engine of growth in developing countries, 1950–2005," Structural Change and Economic Dynamics, Elsevier, vol. 23(4), pages 406-420.
    7. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    8. Kouamé, Wilfried A.K. & Tapsoba, Sampawende J.-A., 2019. "Structural reforms and firms’ productivity: Evidence from developing countries," World Development, Elsevier, vol. 113(C), pages 157-171.
    9. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    10. Kevin M. Murphy & Andrei Shleifer & Robert Vishny, 1989. "Income Distribution, Market Size, and Industrialization," The Quarterly Journal of Economics, Oxford University Press, vol. 104(3), pages 537-564.
    11. Da Rin, Marco & Hellmann, Thomas, 2002. "Banks as Catalysts for Industrialization," Journal of Financial Intermediation, Elsevier, vol. 11(4), pages 366-397, October.
    12. Serena Ng & Pierre Perron, 2001. "LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power," Econometrica, Econometric Society, vol. 69(6), pages 1519-1554, November.
    13. Erasmus L. Owusu & Nicholas M. Odhiambo, 2014. "Financial liberalisation and economic growth in Nigeria: an ARDL-bounds testing approach," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 17(2), pages 164-177, June.
    14. World Bank, 2017. "World Development Indicators 2017," World Bank Publications - Books, The World Bank Group, number 26447.
    15. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," Review of Economic Studies, Oxford University Press, vol. 57(1), pages 99-125.
    16. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    17. Abdul Abiad & Enrica Detragiache & Thierry Tressel, 2010. "A New Database of Financial Reforms," IMF Staff Papers, Palgrave Macmillan, vol. 57(2), pages 281-302, June.
    18. Chow, Peter C. Y., 1987. "Causality between export growth and industrial development : Empirial evidence from the NICs," Journal of Development Economics, Elsevier, vol. 26(1), pages 55-63, June.
    19. Kabango, Grant P. & Paloni, Alberto, 2011. "Financial Liberalization and the Industrial Response: Concentration and Entry in Malawi," World Development, Elsevier, vol. 39(10), pages 1771-1783.
    20. Vanessa Simen Tchamyou, 2017. "The Role of Knowledge Economy in African Business," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(4), pages 1189-1228, December.
    21. Thomas Barnebeck Andersen & Finn Tarp, 2003. "Financial liberalization, financial development and economic growth in LDCs," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(2), pages 189-209.
    22. Oriana Bandiera & Gerard Caprio & Patrick Honohan & Fabio Schiantarelli, 2000. "Does Financial Reform Raise or Reduce Saving?," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 239-263, May.
    23. Ngozi Adeleye & Evans Osabuohien & Ebenezer Bowale & Oluwatoyin Matthew & Emmanuel Oduntan, 2018. "Financial reforms and credit growth in Nigeria: empirical insights from ARDL and ECM techniques," International Review of Applied Economics, Taylor & Francis Journals, vol. 32(6), pages 807-820, November.
    24. Anthony Akinlo, 1996. "The Impact of Adjustment Programme On Manufacturing Industries In Nigeria, 1986–1991: A Sample Study," African Development Review, African Development Bank, vol. 8(1), pages 61-96.
    25. World Bank, 2016. "World Development Indicators 2016," World Bank Publications - Books, The World Bank Group, number 23969.
    26. Shrestha, M.B. & Chowdhury, k., 2006. "Financial Liberalization Index for Nepal," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 3(1), pages 41-54.
    27. Mohsen Bahmani-Oskooee & Maharouf Oyolola, 2007. "Export growth and output growth: An application of bounds testing approach," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 31(1), pages 1-11, March.
    28. Rajan, Raghuram G & Zingales, Luigi, 1998. "Financial Dependence and Growth," American Economic Review, American Economic Association, vol. 88(3), pages 559-586, June.
    29. Ajit Singh, 1998. "Financial liberalisation, stockmarkets and economic development," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 8(1), pages 165-182.
    30. Erasmus L. Owusu & Nicholas M. Odhiambo, 2014. "Financial liberalisation and economic growth in Nigeria: an ARDL-bounds testing approach," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 17(2), pages 164-177, April.
    31. John Weiss, 2018. "Lewis on Industrialisation and Industrial Policy," Journal of International Development, John Wiley & Sons, Ltd., vol. 30(1), pages 61-79, January.
    32. Gui-Diby, Steve Loris & Renard, Mary-Françoise, 2015. "Foreign Direct Investment Inflows and the Industrialization of African Countries," World Development, Elsevier, vol. 74(C), pages 43-57.
    33. Michael Enowbi Batuo & Simplice A. Asongu, 2015. "The impact of liberalisation policies on income inequality in African countries," Journal of Economic Studies, Emerald Group Publishing, vol. 42(1), pages 68-100, January.
    34. Erasmus L. Owusu & Nicholas M. Odhiambo, 2014. "Interest rate liberalisation and economic growth in Nigeria: evidence based on the ARDL-bounds testing approach," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 6(2), pages 130-141.
    35. A. P. Thirlwall, 2015. "Testing Kaldor’s Growth Laws across the Countries of Africa," Palgrave Studies in the History of Economic Thought, in: Essays on Keynesian and Kaldorian Economics, chapter 15, pages 339-351, Palgrave Macmillan.
    36. Louis N. Chete & John Olatunji Adeoti & Foluso M. Adeyinka & Olorunfemi O. Ogundele, 2014. "Industrial Development and Growth in Nigeria: Lessons and Challenges," WIDER Working Paper Series wp-2014-019, World Institute for Development Economic Research (UNU-WIDER).
    37. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    38. Babajide Fowowe, 2013. "Financial Liberalization In Sub-Saharan Africa: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 27(1), pages 1-37, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Simplice A. Asongu & Oludele E. Folarin & Nicholas Biekpe, 2019. "The Stability of Demand for Money in the Proposed Southern African Monetary Union," CEREDEC Working Papers 19/025, Centre de Recherche pour le Développement Economique (CEREDEC).
    2. Simplice A. Asongu & Nicholas M. Odhiambo, 2019. "Governance, capital flight and industrialisation in Africa," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 8(1), pages 1-22, December.
    3. Itaman, Richard E. & Awopegba, Oluwafemi E., 2021. "Finance, oil rent and premature deindustrialisation in Nigeria," Structural Change and Economic Dynamics, Elsevier, vol. 59(C), pages 149-161.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jagadish Prasad Bist & Nar Bahadur Bista, 2018. "Finance–Growth Nexus in Nepal: An Application of the ARDL Approach in the Presence of Structural Breaks," Vikalpa: The Journal for Decision Makers, , vol. 43(4), pages 236-249, December.
    2. Sulaiman, Saidu & Masih, Mansur, 2017. "Is liberalizing finance the game in town for Nigeria ?," MPRA Paper 95569, University Library of Munich, Germany.
    3. Kodila-Tedika, Oasis & Asongu, Simplice A. & Cinyabuguma, Matthias & Tchamyou, Vanessa S., 2017. "Financial development and prehistoric geographical isolation: global evidence," Financial History Review, Cambridge University Press, vol. 24(3), pages 283-306, December.
    4. Chor Foon Tang & Salah Abosedra, 2020. "Does Financial Development Moderate the Effects on Growth Volatility? The Experience of Malaysia," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 14(4), pages 361-381, November.
    5. David Greasley & Les Oxley, 2010. "Cliometrics And Time Series Econometrics: Some Theory And Applications," Journal of Economic Surveys, Wiley Blackwell, vol. 24(5), pages 970-1042, December.
    6. Ekundayo P. Mesagan & Isaac A. Ogbuji & Yasiru O. Alimi & Anthonia T. Odeleye, 2019. "Growth Effects of Financial Market Instruments: The Ghanaian Experience," Working Papers 19/095, European Xtramile Centre of African Studies (EXCAS).
    7. Iyoboyi, Martins, 2019. "Macroeconomic Analysis of Export Diversification in Nigeria," Empirical Economic Review, Department of Economics and Statistics, Dr Hassan Murad School of Management, University of Management and Technology, Lahore, vol. 2(1), pages 83-116.
    8. Conor O'Toole & Carol Newman, 2012. "Investment Financing and Financial Development: Firm Level Evidence from Vietnam," The Institute for International Integration Studies Discussion Paper Series iiisdp409, IIIS.
    9. Erasmus L Owusu, 2016. "Stock Market and Sustainable Economic Growth in Nigeria," Economies, MDPI, vol. 4(4), pages 1-13, November.
    10. Eléazar Zerbo, 2017. "Energy consumption and economic growth in Sub-Saharan African countries: Further evidence," Economics Bulletin, AccessEcon, vol. 37(3), pages 1720-1744.
    11. Muhammad Arshad Khan & Abdul Qayyum, 2006. "Trade Liberalisation, Financial Sector Reforms, and Growth," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 711-731.
    12. repec:ipg:wpaper:2014-485 is not listed on IDEAS
    13. Muhammad Shahbaz & Ijaz Ur Rehman & Ahmed Taneem Muzaffar, 2015. "Re-Visiting Financial Development and Economic Growth Nexus: The Role of Capitalization in Bangladesh," South African Journal of Economics, Economic Society of South Africa, vol. 83(3), pages 452-471, September.
    14. Shahbaz, Muhammad & Mohammad, Mafizur Rahman, 2014. "The Dynamics of Exports, Financial Development and Economic Growth in Pakistan: New Extensions from Cointegration and Causality Analysis," MPRA Paper 53225, University Library of Munich, Germany, revised 19 Jan 2014.
    15. Akinola Ezekiel Morakinyo & Mabutho Sibanda, 2016. "Non-Performing Loans and Economic Growth in Nigeria: A Dynamic Analysis," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 66(4), pages 61-81, October-D.
    16. Niels Hermes & Robert Lensink, 2005. "Does Financial Liberalization Influence Saving, Investment and Economic Growth?: Evidence from 25 Emerging Market Economies, 1973-97," WIDER Working Paper Series RP2005-69, World Institute for Development Economic Research (UNU-WIDER).
    17. Qazi Muhammad Adnan Hye & Shahida Wizarat, 2011. "Impact of financial liberalization on agricultural growth: a case study of Pakistan," China Agricultural Economic Review, Emerald Group Publishing, vol. 3(2), pages 191-209, May.
    18. Phan Thanh Chung & Sizhong Sun & Diem Thi Hong Vo, 2019. "How Does Financial Development Interact With Economic Growth In Five Asean Countries?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 64(03), pages 441-460, June.
    19. Herzer Dierk, 2022. "Semi-endogenous Versus Schumpeterian Growth Models: A Critical Review of the Literature and New Evidence," Review of Economics, De Gruyter, vol. 73(1), pages 1-55, April.
    20. Aviral Kumar Tiwari & Muhammad Shahbaz, 2013. "Modelling the Relationship between Whole Sale Price and Consumer Price Indices: Cointegration and Causality Analysis for India," Global Business Review, International Management Institute, vol. 14(3), pages 397-411, September.
    21. Ashis Kumar Pradhan & Gourishankar S Hiremath & David McMillan, 2020. "Do external commercial borrowings and financial development affect exports?," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1796269-179, January.

    More about this item

    Keywords

    Financial reforms; Financial repression; Industrialisation; ARDL bounds test;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aby:wpaper:19/014. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.ceredec.org/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anutechia Asongu Simplice (email available below). General contact details of provider: http://www.ceredec.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.