The study investigated the effect of selected macroeconomic variables on the financial sector of Nigeria from 1986 to 2018. The study employed monetary target variables, namely money supply, interest rate, inflation rate, exchange rate and credit to private sector as proxies for macroeconomic variables while the outputs from financial sector on as dependent variable. The data obtained from the Central Bank of Nigeria Statistical Bulletin, were tested subjected to Augmented Dickey Fuller ADF test of stationarity, descriptive statistics, and Autoregressive Distributive Lag ARDL . The results revealed that macroeconomic variables has 99 significant short run effect but no significant long run effects on financial sector output in Nigeria. Specific findings revealed that money Supply M2 and Exchange Rate EXR have significant positive relationships with growth of the financial sector at current and third lags, respectively but inflation rate has a significant negative effect on financial sector output in the current period, while Interest rate INT and Credit to Private Sector had no significant effect on financial sector output within the short run periods in Nigeria. It thus recommended that the government employ inflation stabilisation policies and encourage export, and close borders to import on financial services into Nigeria. Dr. Loretta Anayoozuah | Prof. Steve N. Ibenta | Dr. Ikenna Egungwu "Macroeconomic Variables and Financial Sector Output in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-1 , December 2020, URL: https://www.ijtsrd.com/papers/ijtsrd37966.pdf Paper URL : https://www.ijtsrd.com/management/accounting-and-finance/37966/macroeconomic-variables-and-financial-sector-output-in-nigeria/dr-loretta-anayoozuah
International Journal of Trend in Scientific Research and Development (IJTSRD)
Volume 5 Issue 1, November-December 2020 Available Online: www.ijtsrd.com e-ISSN: 2456 – 6470
@ IJTSRD | Unique Paper ID – IJTSRD37966 | Volume – 5 | Issue – 1 | November-December 2020
Page 364
Macroeconomic Variables and
Financial Sector Output in Nigeria
Dr. Loretta Anayoozuah1, Prof. Steve N. Ibenta2, Dr. Ikenna Egungwu1
1Department of Banking and Finance, Chukwuemeka Odumegwu Ojukwu University, Anambra State, Nigeria
2Department of Banking and Finance, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria
ABSTRACT
The study investigated the effect of selected macroeconomic variables on the
financial sector of Nigeria from 1986 to 2018. The study employed monetary
target variables, namely money supply, interest rate, inflation rate, exchange
rate and credit to private sector as proxies for macroeconomic variables while
the outputs from financial sector on as dependent variable. The data obtained
from the Central Bank of Nigeria Statistical Bulletin, were tested subjected to
Augmented Dickey-Fuller (ADF) test of stationarity, descriptive statistics, and
Autoregressive Distributive Lag (ARDL). The results revealed that
macroeconomic variables has 99% significant short run effect but no
significant long run effects on financial sector output in Nigeria. Specific
findings revealed that money Supply (M2) and Exchange Rate (EXR) have
significant positive relationships with growth of the financial sector at current
and third lags, respectively; but inflation rate has a significant negative effect
on financial sector output in the current period, while Interest rate (INT) and
Credit to Private Sector had no significant effect on financial sector output
within the short run periods in Nigeria. It thus recommended that the
government employ inflation stabilisation policies and encourage export, and
close borders to import on financial services into Nigeria.
Keywords: Macroeconomi