research_article August 7, 2026

Effect of Financial Market Development on Nigeria’s Economic Growth

Mukolu M.O, Ajayi J E, Dombo V A
Volume1
Issue3
Pages112-118
DOI10.5281/zenodo.21861436
Abstract

This study examined the effect of financial market development on economic growth in Nigeria between 2013 and 2023. Financial market development was proxied using broad money supply (M2), savings, time deposits, and domestic credit to the private sector, while economic growth was measured using Gross Domestic Product (GDP). Secondary data were sourced from the Central Bank of Nigeria (CBN), World Bank, and other relevant financial databases. The study employed the Autoregressive Distributed Lag (ARDL) technique after conducting stationarity tests using the Augmented Dickey-Fuller (ADF) approach. Findings revealed that broad money supply exerted a negative but insignificant influence on economic growth, while domestic credit to the private sector and inflation exhibited positive but insignificant effects. The study further established the existence of a long-run relationship between financial market indicators and economic growth. The study concludes that financial market development remains a critical driver of economic growth; however, inefficiencies in financial intermediation and macroeconomic instability limit its effectiveness in Nigeria. The study recommends strengthening financial sector reforms, enhancing financial inclusion, and improving credit allocation to productive sectors.

Keywords
Financial Market DevelopmentEconomic GrowthBroad Money SupplyDomestic CreditARDLNigeria.
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