Title: Effect Of Financial Intermediation On Economic Growth In Nigeria
Authors: AZEEZ Bolanle Aminat and AYORINDE Babatunde Femi
Volume: 9
Issue: 9
Pages: 30-41
Publication Date: 2025/09/28
Abstract:
The study examined effect of financial intermediation on economic growth in Nigeria from 1986 to 2023. The study employed autoregressive distribution lag (ARDL) model and pairwise granger causality test as estimated technique, the result revealed that all variable (LNMS, LNLR, LNCPS and LNINF) has an insignificant impact on RGDP in the long run. Also, it was revealed that money supply, lending rate and inflation rate has a negative effect on real gross domestic product in the long run while credit to private has a positive effect on real gross domestic product in the long run. Also, result revealed a causal relationship between financial intermediation and economic growth in Nigeria. Evidence from the result revealed that there was no relationship between LNMS to LNRGDP, also, there was a unidirectional relationship from LNRGDP to LNLR. Also, there was a unidirectional relationship from LNRGDP to LNCPS and lastly, there was no causal relationship between LNINF and LNRGDP and concluded that there was a bidirectional relationship between financial intermediation and economic growth in Nigeria. Therefore, recommended that; management of banks should be encouraged to pursue policies that will deepen the efficient allocation of financial services for economic growth in Nigeria; policymakers should consider the historical trends of banking intermediation metrics when shaping policies; continuous monitoring of these metrics is essential for anticipating shifts in economic growth trends; and Lastly, policy measures are recommended to enhance the efficiency of banking intermediation, focusing on credit allocation, currency management, and loan-to-deposit ratios.