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Financial Development, Money, Public Expenditure and National Income in Nigeria

A Enisan Akinlo and O Olufisayo Akinlo
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A Enisan Akinlo: Department of Economics, Obafemi Awolwo University, Ile-Ife, Nigeria.
O Olufisayo Akinlo: Department of Management and Accounting, Obafemi Awolwo University, Ile-Ife, Nigeria.

Authors registered in the RePEc Author Service: Anthony Enisan Akinlo

Journal of Social and Economic Development, 2007, vol. 9, issue 1, 1-24

Abstract: This paper examines the effects of financial development, money and public spending on national income in Nigeria. The results of the study, obtained using the Vector Error Correction model, show weak evidence for supply-leading view of financial development. In addition, the results provide some support for the McKinnon-Shaw repressionist proposition. Finally, there is no clear evidence to support monetary and fiscal policy effectiveness in the country. Based on these findings, the paper suggests that efforts should be geared towards the development of the financial sector, in particular, further deregulation of the sector. However, financial deregulation should be done in such a manner that the rate of interest is not allowed to be too high to discourage borrowing or too low to discourage saving and engender inefficient and unproductive investment.

Date: 2007
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