A CAUSALITY INVESTIGATION OF FINANCIAL LIBERALIZATION AND THE PERFORMANCE OF NIGERIAN ECONOMY (1990-2018)

Priye Werigbelegha Andabai

Abstract


The study investigated the causal relationship between financial liberalization and performance of the Nigerian economy; for the period (1990-2018). Variables used for this study are stated as Gross Domestic Product employed as the dependent variable of the study. Financial liberalization variables (explanatory variables) include: Credit to the Private Sector,  Total Bank Deposits and Market Capitalization. The secondary data were used and collected from the Central Bank of Nigeria Statistical Bulletin. Hypotheses were formulated and tested using time series econometrics models.The study revealed that the variables do not have unit roots. There was also long-run equilibrium relationship between financial liberalization and performance of the Nigerianeconomy.The Vector Error Correction Model (VECM) result confirmed that about 87% short-run adjustment speed from long-run disequilibrium. The coefficient of determination indicated that about 68% of the variations in performance of the Nigerian economy can be explained by changes in financial liberalization variables. The study had a causality between financial liberalization and performance of the Nigerian economy. The study recommended that strong macroeconomic policies such as (monetary and fiscal) should be adopted to maintain and stabilize the economy. CBN should lay down strict prudential rules and regulations to stabilize and strengthen the banking industry. The Government and monetary authority should implement policies that will increase the flow of investable funds and improves the capacity of banks to extend credit to the economy

Keywords


Causality Investigation, Financial liberalization, Performance and Nigerian Economy.

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References


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