Rethinking the Interaction Between Banks and Markets in the Nigerian Financial Architecture

Augustine C. Arize, Ebere Ume Kalu and Nelson N. Nkwor ()
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Nelson N. Nkwor: University of Nigeria

The African Finance Journal, 2018, vol. 20, issue 1, 24-38

Abstract: This paper reexamines the interplay between banks and capital markets in the Nigerian financial system. Using the ARDL/Bounds test cointegration approach and error correction model (ECM) technique on the time-series data obtained from the Central Bank of Nigeria (CBN) for the period 1981-2014, we found a long-run link between bank and market models--a complementary rather than competing association--which suggests a co-evolving development in the Nigerian financial structure. This finding underscores that, for enhanced economic growth, policy makers need to develop actionbased policies for the development of both banks and capital markets in the Nigerian financial system.

Keywords: Financial Architecture; Financial System; Bank-Based Economy; Market-Based Economy; Bound Test; ARDL; Error Correction Model (search for similar items in EconPapers)
JEL-codes: E44 G21 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journl:v:20:y:2018:i:1:p:24-38

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