Effect of Primary and Secondary Foreign Direct Investment on Financial Deepening in Nigeria

Jonah Okpe Arumona and Adebayo Samuel Oguntade
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Jonah Okpe Arumona: Department of Accounting, Faculty of Administration Bingham University
Adebayo Samuel Oguntade: Department of Accounting, Faculty of Administration Bingham University

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 6, 3639-3652

Abstract: Nigeria’s financial system has shown that the financial deepening of the country seems to be improving over the years but the question that is begging for an answer is that, is the level of primary and secondary foreign direct investment in the country sufficient to widen the quantum of financial deepening required to improve the nation’s economy. The study examines effect of foreign direct investment on financial deepening in Nigeria for the duration of 31 years starting from 1993 to 2023. Secondary data was obtained from Central Bank Nigeria Statistical Bulletin and the data was analysed using Autoregressive Distributed Lag (ARDL) techniques. Findings show that the primary foreign direct investment and secondary foreign direct investment have positive and significant effect on financial deepening. The study therefore concludes that foreign direct investment has significant effect on financial deepening in Nigeria. The study recommends that government should create an enabling and favourable environment that encourages primary foreign direct investment in the extractive and agricultural sector in Nigeria, which will help increase the gross domestic product.

Date: 2025
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