Financial Reforms and Industrial Productivity Growth in Nigeria

Abstract

The effective performance of industrial sector of every economy depends largely on the level of development in the financial system of the country and also on the intermediation between the surplus and the deficit units of the economy. Based on these assertions, the study empirically investigated the impact of financial reforms on industrial productivity growth in Nigeria. A vector auto-regression analysis with impulse-response and variance decomposition was employed, using a time series data between the period of 1986 and 2013. The study however found out that the various financial services reforms put in place since the introduction of the Structural Adjustment Programme (SAP) in Nigeria have not significantly brought about the needed improvement in the level of industrial productivity growth in the country. It is imperative for the financial reform operations to specifically target the industrial sector of the economy through a growth engendering reform policy capable of ensuring a sizeable and economically viable lending interest rates regimes. The provision of expansionary grants for the real sector of the economy would also serve as opportunity to increase the percentage contribution of industrial sector to the country’s gross domestic product.

Keywords: Industry, GDP, VAR Model, Financial Reforms and Nigeria.