Financial Development and Inclusive Growth in Nigeria: A Multivariate Approach
Financial development is a multidimensional concept that constitutes a potentially important mechanism for long run growth in an economy. However, short-run gains at the expense of long-run growth coupled with various exogenous factors could have precipitated economic fluctuations in Nigeria. Therefore, efforts to moderate these fluctuations by successive federal authorities must have prompted them to adopt various economic policy measures including Stabilization Policy, 1981- 1983, Structural Adjustment Programe (SAP), 1986-1992; Medium Term Economic Strategy, 1993-1998 and the Economic Reforms 1999-2007, on the basis that such policy actions can engender economic growth in the long run. This was eventually the driving force behind various financial policy reforms in Nigeria. However, in spite of all these reforms, the associated problems that exist still include: inefficiency in the allocation of funds to the productive sectors, lack of long-dated funding and decline in domestic credit to the private sector. All these frustrate inclusive growth experience in the country. Therefore, the important issues of concern are: what level of financial development is required for growth to be inclusive? How can the economy create and support inclusive growth through the financial sector? Hence, the objective of the paper is to examine the impact of financial development on inclusive growth in Nigeria using a multivariate model (Bound testing approach), this study obtained new evidence for the finance-growth nexus in Nigeria.
Adediran Oluwasogo S, Oduntan, Emmanuel, Matthew Oluwatoyin