Priye Werigbelegha Andabai, Maryann Nwamaka Igbodika


This study examined the relationship between financial markets development and private sector growth in Nigeria for the period, 1989-2016. The study adopted time series data obtained from Central Bank of Nigeria Statistical Bulletin. The study employed Private Sector Output as proxy for Private Sector Growth and used as the dependent variable; whereas, Broad Money Supply, Credit to the Private Sector, Interest Rate and Market capitalization are used as the explanatory variables to measure financial markets development. Hypotheses were formulated and tested using time series econometrics techniques. The study revealed that all the variables of the study are stationary at first difference. The study showed the existence of at least one co-integrating relationship at 5% level of significance. The study revealed no short-run equilibrium significant relationship between financial markets development and the private sector growth in Nigeria. There is no causal relationship between financial markets development and private sector growth in Nigeria. The study concluded that financial markets development has not significantly contributed to the growth and development of the private sector-led economy in Nigeria. The study recommended that for the private sector to grow, the sector should be encouraged in form of concessional and reduced interest rate. The study suggested that regulatory authorities should stabilize the interest rate which is capable of ensuring price stability and maintaining inflation to a single digit. This may build confidence in the financial institutions and will enable them to introduce innovations to boost the private sector output in the economy. CBN and policy makers should adopt vibrant economic policies; such as, interest rate stability, flexible exchange rate, indigenization and economic diversification which will encourage the financial institutions in financing the private sector led-economy.


Financial, markets, development, private, sector, growth, Nigeria.

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