FINANCIAL SYSTEM DEVELOPMENT AND ECONOMIC GROWTH IN NIGERIA

This study examined the relationship financial system development and economic growth in Nigeria over the period of 1980 - 2022. The study’s objective is to determine the relationship between private sector credit and economic growth, ascertain the relationship between liquid liabilities ratio and economic growth in Nigeria, examine the relationship between market capitalization and economic growth in Nigeria, examine the relationship between turnover ratio and economic growth in Nigeria and examine the relationship between value of traded shares and economic growth in Nigeria. The ex-post facto research design was employed in this study, the ADF test for stationarity of was taken at difference and first levels, cointegration and ECM short run and Long run analysis was taken. The analysis of the data revealed that liquid liabilities ratio has a long run relationship with economic growth in Nigeria, private sector credit has a strong positive factor that drives economic growth in Nigeria in both the short and long run respectively. market capitalization has a positive significant impact on economic growth in Nigeria in the short and long run respectively, turnover ratio has a strong long run relationship with economic growth in Nigeria, values of shares traded has no long run relationship with economic growth in Nigeria. Also, turnover ratio (TRG) and market capitalization (MCG) are the most significant financial development measures which influences economic growth in the long run gauged from their respective t – ratios. The study recommended that that the ongoing reforms in the banking system and capital market should be intensified so as to boost the development of these segments of the financial system and by that increase their role in economic growth. Also the regulation and supervision of the financial system should be strengthened as it plays a great role in determining both its stability and the extent of the services provided