Title: FINANCIAL SECTOR DEVELOPMENT AND REAL SECTOR GROWTH IN NIGERIA

Author: Dr. S.L.C Adamgbo

Abstract: This study examines financial sector development and Nigeria real sector output growth. The real sector is categorized into; services, industry and agriculture relative to GDP as dependent variables while financial sector development were proxied by; ratio of credit to the private sector to GDP, ratio of broad money supply to GDP and ratio of banking industry asset to GDP as independent variables. The purpose was to examine whether financial sector expansion influences output of the real sector in Nigeria. Within the correlational research design approach, the study utilized time series data covering the periods 1981-2023. The study explores the dynamic ordinary least square regression in the estimation of the models. The finding revealed that the key financial sector development indicators does not significantly impact the real sector in the long-run, the agricultural sector correlates with ratio of credit to the private sector negatively while it has a positive link with the total banking industry assets. The study confirms existence of the linkage between financial sector development and real sector output growth in Nigeria though not statistically strong enough. This revelation leads to the conclusion that development in the Nigeria’s financial factor has not been transformational and substantial to influence growth of the real sector. Hence, the proposition that both the government and regulators of the financial system in Nigeria should thrive to ensure compliance to exiting policies to initiate sector-based credit allocation and credit guaranteed schemes favourable to boosting the real sector so as to reap the gains of financial sector expansion.

Keywords: Financial Development Real Sector, Output Growth, Broad money, Financial inclusion, exclusion, depth, stability etc.

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