Financial reforms and credit growth in Nigeria: Empirical insights from ARDL and ECM techniques
Ngozi Adeleye (),
Evans Osabuohien (),
Oluwatoyin Matthew and
MPRA Paper from University Library of Munich, Germany
In the last 37 years Nigeria has undergone several stages of financial reforms with different impacts on the economy. Hence, this paper empirically analyses the impact of financial reforms on credit growth in Nigeria using annual data from 1980 to 2016. The research work hinges on the theoretical underpinning of the McKinnon-Shaw hypothesis on the relevance of financial reforms in a lagging economy. Analysing the data with autoregressive distributed lag (ARDL) error correction representation and bounds testing techniques, we notably find evidence to this hypothesis and state that at higher real interest rate there is increased financial intermediation evidenced by credit growth. Other findings are that in the long-run, financial system deposits, inflation rate and per capita GDP are strong asymmetrical predictors of credit growth and real interest rate (the financial reform indicator) while the short-run relationships are indicator-specific. We further show that a long-run cointegration relationship exists between domestic credit and other covariates and likewise between the real interest rate and its regressors.
Keywords: autoregressive distributed lag; bounds testing, cointegration, credit growth, financial reform, interest rate (search for similar items in EconPapers)
JEL-codes: E43 E44 G18 G19 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-afr, nep-fdg and nep-mac
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Published in International Review of Applied Economics DOI: 10.1080/02692171.2017.1375466 (2017): pp. 1-14
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Journal Article: Financial reforms and credit growth in Nigeria: empirical insights from ARDL and ECM techniques (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:85351
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