Title: Financial Deepening And Economic Growth
Authors: Ekule Chiyenum Comfort, Ehiedu, Victor C Ph.D
Volume: 9
Issue: 5
Pages: 136-143
Publication Date: 2025/05/28
Abstract:
This research investigates the connection between financial deepening and economic growth (ECOG) in Nigeria, emphasizing the roles of domestic credit to the private sector (CREP), broad money supply (BROM), and financial inclusion (FINI). As Nigeria strives for sustainable economic advancement, it becomes essential to comprehend how developments in the financial sector contribute to growth. The study utilizes a quantitative approach, analyzing data sourced from the Central Bank of Nigeria (CBN) and global financial organizations over a 16-year span (2008-2023). Key diagnostic tests conducted include Descriptive Statistics, Correlation Analysis, Multicollinearity (Variance Inflation Factor), and Heteroskedasticity Test, followed by the application of Ordinary Least Squares (OLS) Regression to assess the impact of CREP, BROM, and FINI on ECOG. Findings suggest that financial deepeningrepresented by increased access to credit, broader money circulation, and greater financial inclusionpositively and significantly influences Nigeria's economic growth. Nonetheless, the study also uncovers issues such as improper credit distribution, inflation risks from excessive money supply, and the necessity for enhanced digital financial access in remote areas. This paper enriches existing literature by offering evidence-based suggestions on improving financial reforms to promote equitable and sustained growth. It recommends improving credit distribution efficiency and ensuring monetary expansion does not trigger inflation.