Financial Deepening and Entrepreneurial Development in Nigeria: Evidence from 1981–2024

Sydney Clever Keremah
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Sydney Clever Keremah: Department of Accounting and Finance, Faculty of Management and Social Sciences, Margaret Lawrence University

East African Finance Journal, 2026, vol. 5, issue 1

Abstract: This study investigates the relationship between financial deepening and entrepreneurial development in Nigeria using annual data from 1981 to 2024. Non-oil GDP is used as a proxy for entrepreneurial development, while financial deepening is captured through money supply, credit to the private sector, lending rate, and exchange rate. The analysis employs various econometric techniques, including the Johansen cointegration test, Vector Error Correction Model (VECM), and Granger causality tests, to examine both short- and long-run dynamics. The results reveal the existence of a stable long-run relationship among the variables. Money supply and exchange rate exert positive effects on entrepreneurial development, while credit to the private sector shows a negative long-run effect, suggesting inefficiencies in credit allocation. Lending rates appear largely insignificant. Granger causality findings indicate that non-oil GDP drives changes in money supply, private sector credit, and exchange rate, highlighting the role of entrepreneurial activity in shaping financial sector dynamics. The study concludes that entrepreneurial development is a key driver of Nigeria’s financial and monetary system and recommends that financial institutions enhance access to credit for small and medium-sized enterprises (SMEs). Additionally, government policies should prioritize support for sectors such as agriculture, manufacturing, and services to stimulate sustainable economic growth.

Keywords: Financial Deepening; Entrepreneurial Development; Non-Oil GDP; Credit to Private Sector (search for similar items in EconPapers)
JEL-codes: E44 L26 O55 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:eafjke:2026-14

DOI: 10.59413/eafj/v5.i1.14

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