Human Capital Development in Nigeria: Does Financial Deepening Matter?

Osuka, B. O., Ihejirika, Peters O., Chinweze, Reginald M.


This study investigated the impact of Financial Deepening on Human Capital development in Nigeria. Human Development Index (HDI) was used as proxy for Human Capital development due to its multidimensional nature while the ratios of Credit to the Private Sector, Broad Money Supply and Market Capitalization were used to proxy financial deepening. Data sourced from Central Bank of Nigeria Statistical Bulletin (2015) and World Development Indicators from 1981 to 2015 were used. Johansen Cointegration Test was employed to determine the existence of long-run relationship between Financial Deepening and Economic Development while Error Correction Model was used to determine the adjustment factor and causality. It was found that there is a unidirectional causality running from financial deepening to Human Capital Development. The study concluded that financial deepening is important and beneficial in improving Human Capital in Nigeria. The study therefore recommends that Policy Makers should sustain existing financial deepening policies to improve education and health care delivery and ultimately increase the economic outputs of the nation.

Keywords: Human Capital, Financial Deepening and Economic Growth

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