FINANCIAL LIBERALIZATION AND PERFORMANCE OF THE NIGERIAN ECONOMY (1987-2015): INVESTIGATING THE NEXUS

Tonye Ogiriki, Andabai Priye Werigbelegha

Abstract


The study examines the relationship between financial liberalization and performance of the Nigerian economy using time series spanning data (1987-2015). The data used to conduct this studywere collected from the Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics. Hypotheses were formulated and tested using time series econometrics techniques.The study reveals that the variables do not have unit roots. There is also long-run equilibrium relationship between financial liberalization and performance of the Nigerianeconomy.The Vector Error Correction Model (VECM) result confirms that about 73% short-run adjustment speed from long-run disequilibrium. The coefficient of determination indicates that about 63% of the variations in performance of the Nigerian economycan be explained by changes in financial liberalization variables. There is no causality between financial liberalization andperformance of the Nigerian economy. The study therefore recommends that, strong macroeconomic policies such as (monetary and fiscal) should be adopted to maintain and stabilize the economy. CBN should lay down strict prudential rules and regulations to stabilize and strengthen the banking industry. The Government and monetary authority should implement policies that will increase the flow of investable funds and improves the capacity of banks to extend credit to the economy.


Keywords


Financial, liberalization, Performance, Nigeria And Economy.

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References


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