Blessing Tarila ORUWARE

This study investigates the impact of financial efficiency on Nigeria’s economic performance, focusing on economic growth, price instability (inflation), and trade balance. The research is anchored on the theories of financial intermediation and endogenous growth, which emphasize the role of efficient financial systems and capital accumulation in driving economic development. Employing the Autoregressive Distributed Lag (ARDL) approach to accommodate the mixed order of integration of the variables, the study estimates three models to assess both short-run and long-run effects. The findings reveal that financial efficiency does not have a statistically significant impact on economic growth or inflation control, contrary to many previous studies. However, financial efficiency demonstrates a significant short-run effect on stabilizing the trade balance.These results suggest that structural and institutional weaknesses, along with human capital challenges, limit the ability of financial efficiency to foster sustained economic improvements in Nigeria. The study concludes that financial sector reforms must be integrated with broader institutional and macroeconomic policies to enhance economic performance and sustainable development.