An Analysis of Financial System Development and Banking Sector Performance in Nigeria

Georgina Okpoa Asemota, Osamede Imelda Asemota and Charity Lucky Omoregie
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Georgina Okpoa Asemota: Senior Lecturer, Benson Idahosa University Benin City Nigeria
Osamede Imelda Asemota: Staff, Edo State Secondary Education Board, Benin City Nigeria
Charity Lucky Omoregie: Staff, Edo State Secondary Education Board, Benin City Nigeria

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 5, 1459-1472

Abstract: The study assessed the impact of financial system development on the banking sub-sector performance in Nigeria by using indices representing financial access, financial efficiency and financial depth as its explanatory variables. The proxy used for banking sector performance is the capital adequacy ratio. Due to the paucity of high-frequency data for the relevant variables, the study converted the sourced annual data spanning from 2004 to 2021 to monthly data. The preliminary data investigation indicated that the ARDL model is appropriate for the analysis. An ARDL-ECM model was then estimated using the Ordinary Least Square estimation technique. The results reveal that the financial market’s activities are significant determinants of banking performance in Nigeria. The paper recommends that making the capital market and other non-bank institutions more attractive to investors should be a priority policy.

Date: 2023
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