FINANCIAL SECTOR LIBERALIZATION AND NIGERIA ECONOMIC GROWTH: A TIME-VARIANT STUDY

Abstract

This study examined the relationship between financial sector liberalization and Nigeria economic growth. Time series data were sourced from Central Bank of Nigeria statistical bulletin from 19902023. Financial sector liberalization were proxy by savings rate liberalization, lending rate liberalization, exchange rate liberalization, capital market liberalization and current account liberalization while Nigeria economic growth was proxied by real gross domestic product. Multiple regressions with econometrics view statistical package were used as data analysis techniques. Co integration, Granger Causality Test and Augmented Unit Root Test were used to determine the long and the short run relationship that exist among the variables. Findings of the study revealed that current account liberalization, capital market liberalization and lending rate liberalization have negative relationship with Nigeria economic growth while exchange rate liberalization, and savings rate liberalization have positive relationship with Nigeria economic growth. From the regression summary, the study conclude that financial sector liberalization have significant relationship with economic growth in Nigeria. We recommend that exchange rate deregulation should be deepened and the policies revisited to stimulate economic growth. Nigerian Interest rate liberalization such as lending, monetary policy rate and prime lending rate should be harmonized with the objective of economic growth. There should be policies to further deepen the operational effectiveness and effectiveness of the financial system for increase financial sector development. Implementable polices should be made to enhance Nigeria economic growth.