Financial Deepening, Private Domestic Savings and Per Capita Gdp Growth in Nigeria

Abstract

A general way of evaluating the economic welfare or living standards of country is through its per capita GDP, This study investigates empirically the impact of financial deepening on per capita GDP growth, the interaction effect of financial deepening and private domestic savings on Nigeria’s GDP per capita growth and how per capita GDP respond to shocks in financial deepening in Nigeria. Financial deepening is represented by, the ratio of private sector credit to gross domestic product (PSC/GDP). This study used quarterly data from 1986 to 2014 and was generated from both the CBN (2015) statistical bulletin and World Bank (2015) database. Concerning the Impact of Financial Deepening on GDP per capita and the Interaction effect of private domestic Savings and Financial deepening on GDP per capita, ARDL model was implore,. This thesis therefore, makes a modest contribution to the literature having identified that  financial deepening can contribute to GDP per capita growth, if there is an improvement in domestic resources mobilization, and efficiency in capital allocation in the country. Simply put, these results appear to reveal that various financial development policies have not contributed enough to Nigeria’s per capita growth. However, if government and financial institutions can encourage mobilization of domestic savings; develop credit and equity markets; minimise financial risk; and ensure efficiency of capital allocation, Nigerians can benefit from the deepening of the financial sector and domestic savings in the long-run development of the country.