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Financial Sector Development and Domestic Savings in Nigeria: A Bounds Testing Co-Integration Approach

Ewetan , O. O. and Ike, D. N. and Urhie, Ese S (2015) Financial Sector Development and Domestic Savings in Nigeria: A Bounds Testing Co-Integration Approach. International Journal of Research in Humanities and Social Studies, 2 (2). pp. 37-44. ISSN ISSN 2394-6288 (Print) & ISSN 2394-6296 (Online).

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Abstract

This study examines the long-run relationship between financial sector development and domestic saving in Nigeria for the period 1980 to 2012 using time series data. It employs bounds tests cointegration approach also known as autoregressive distributed lag estimation due to mixed integration order of the variables and small sample size. The study made use of a composite index constructed from the three alternative financial development indicators measures. The econometric results provide evidence of long run relationship between financial sector development and domestic saving in Nigeria. The constructed composite index of financial development has a positive and significant impact on domestic savings likewise each of the respective three components of this index has a positive impact on domestic saving. Government should therefore consolidate on past financial sector reforms to improve domestic saving mobilization to reduce the dependence of Nigeria on foreign savings to finance domestic investment.

Item Type: Article
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: Dr Ese Urhie
Date Deposited: 26 Mar 2015 14:30
Last Modified: 26 Mar 2015 14:30
URI: http://eprints.covenantuniversity.edu.ng/id/eprint/4317

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