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Financial reforms and credit growth in Nigeria: empirical insights from ARDL and ECM techniques

Adeleye, Bosede Ngozi and Osabuohien, E. S. C. and Bowale, Ebenezer I.K and Matthew, Oluwatoyin and ODUNTAN, EMMANUEL (2017) Financial reforms and credit growth in Nigeria: empirical insights from ARDL and ECM techniques. International Review of Applied Economics. pp. 1-15.

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In the last 37 years, Nigeria has undergone several stages of financial reforms with different impacts on the economy. This paper analyses the impact of these financial reforms on credit growth in Nigeria using annual data from 1980 to 2016. The research work hinges on the theoretical underpinning of McKinnon-Shaw hypothesis on the relevance of financial reforms in a lagging economy. Analysing the data with autoregressive distributed lag error correction representation and bounds testing techniques, we find evidence supporting this hypothesis, and specifically that at higher real interest rates 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 rates (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.

Item Type: Article
Uncontrolled Keywords: Autoregressive distributed lag; bounds testing; cointegration; credit growth; financial reform; interest rate
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Hannah Akinwumi
Date Deposited: 13 May 2021 15:02
Last Modified: 13 May 2021 15:02

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