FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: GRANGER CAUSALITY FOR NIGERIA
Keywords:
Indicator, Growth, GDP, Economic, Development, CausalityAbstract
This paper examines the causal relationship between Financial Development and Economic Growth in Nigeria for the period of 1981-2016; include financial indicators and examine their effects on economic growth provided by real GDP. The study used Augmented Dickey Fuller (ADF) test to examine the stationary status of the series. Moreover, Granger Causality and Johansen co-integration test were employed to check the direction of causality and relationship between financial development and Economic Growth. The result indicates that all series were stationary after the second difference I(2); however, there exist a stable relationship between financial development and economic growth. Furthermore, there is significant pass through between financial deepening to economic. This implies that during the period of study financial development stir up economic growth. The study reveal that money supply contribute significantly to economic growth in Nigeria and Finally, credits to private sectors make little contribution to economic growth in Nigeria.
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