Impact of Financial Intermediation on Economic Growth in Nigeria: A Disaggregate Approach

Abstract

This paper re-examined the impact of financial intermediation on economic growth in Nigeria. The objective of the study was to determine the disaggregate influence of credit to the private sector in Nigeria. To achieve this, we adopted the ex post research design to determine how the explanatory variables affects the dependent variable in retrospect. The study further adopted the Engle Granger Representative Theorem to estimate the functional relationship in the model. The empirical results predict that loans and advances to agriculture, fisheries forestry, manufacturing sector and commercial bank credit to small scale enterprises has a significant influence on economic growth in Nigeria. We therefore suggest that banks should be more efficient in mobilizing and allocating funds to entrepreneurs in the real sector. The policy implication of this is that regulatory authorities should continue to take measures to liberalize the financial system to avoid any form of shock on the system.

Keywords: Financial intermediation, economic growth, Nigeria, private sector, disaggregate