scholarly journals Institutional Quality and Financial Sector Development: Empirical Evidence from Nigeria

2018 ◽  
Vol 7 (1) ◽  
pp. 1 ◽  
Author(s):  
Fisayo Fagbemi ◽  
John Oluwasegun Ajibike
Keyword(s):  
Empirical Evidence ◽  
Financial Development ◽  
Good Governance ◽  
Developing Economies ◽  
Institutional Quality ◽  
Financial Sector ◽  
African Countries ◽  
Financial Sector Development ◽  
Long Run ◽  
Short Run

In view of the indispensable role of financial sector in both emerging and developing economies, there has been a notable spotlight on the financial sector development over the years in most African countries. Nonetheless, there are only a few studies on this topical issue, particularly for Nigeria. Hence, this study examines the long – run and short – run dynamic relationship between institutional quality and financial development in Nigeria over the period of 1984 – 2015 using Auto-Regressive Distributed Lag (ARDL) bounds test approach to cointegration. Using two different indicators (Private credit and M2) of financial development, the results consistently show that institutional factors do not have significant effect on financial development in the long – run as well as in the short – run. Furthermore, the empirical evidence indicates that regulatory quality and governance system (institutions) do not necessarily contribute to financial development in a feeble institutional environment, specifically in Nigeria. Thus, our findings suggest that whilst weak institutions could increase the risk of limiting the functioning of financial system, good governance and strong institutions are the essential ingredient of financial development in Nigeria. As a consequence, policies aimed at strengthening the quality of institutions and governance should form the major policy thrust of government (policy makers). These could help improving financial sector development in Nigeria.

scholarly journals The Impact of Inflation on Financial Sector Development: Evidence from Nigeria

2020 ◽  
Vol 12 (2) ◽  
pp. 56
Author(s):  
Afangideh U. J. ◽  
Garbobiya T. S. ◽  
Umar F. B. ◽  
Usman N.
Keyword(s):  
Financial Development ◽  
Significant Relationship ◽  
Financial Sector ◽  
Threshold Effects ◽  
Quarterly Data ◽  
Financial Sector Development ◽  
Long Run ◽  
Short Run ◽  
Auto Regressive ◽  
The Impact

This paper examines the Impact of inflation on financial sector development in Nigeria using quarterly data from 2002-2017. Financial sector development is proxied using money supply as a share of GDP (M2/GDP).The Auto-Regressive Distributive lag (ARDL) model is employed to carry out the estimation given the weakness of the Engle-Granger residual-based cointegration technique to test the long-run and short-run effects of the impacts of inflation on financial sector development. The results of the estimation reveal that there is a positive and statistically significant relationship between inflation and financial sector development in Nigeria. There is need to test for threshold effects of inflation on financial development in Nigeria.

scholarly journals Inflation and Financial Sector Performance: The Case of Nigeria

2014 ◽  
Vol 7 (1) ◽  
pp. 55-69 ◽  
Author(s):  
R. Santos Alimi
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Sector ◽  
Macroeconomic Performance ◽  
Financial Sector Development ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
Sector Performance ◽  
Definition Of

Abstract The paper examines the long run and short run relationships between inflation and the financial sector development in Nigeria over the period between 1970 and 2012. Three variables, namely; broad definition of money as ratio of GDP, quasi money as share of GDP and credit to private sector as share of GDP, were used to proxy financial sector development. Our findings suggest that inflation presented deleterious effects on financial development over the study period. The main implication of the results is that poor macroeconomic performance has deleterious effects to financial development - a variable that is important for affecting economic growth and income inequality. Moreover, we observed a negative effect of the measures of financial development on growth, suggesting that impact of inflation on the economic growth passes through financial sector. Therefore, low and stable prices, is a necessary first step to achieving a deeper and more active financial sector that will enhance growth as predicted by Schumpeter.

Financial development and poverty reduction in India: an empirical investigation

2016 ◽  
Vol 43 (2) ◽  
pp. 106-122 ◽  
Author(s):  
Madhu Sehrawat ◽  
A K Giri
Keyword(s):  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Annual Data ◽  
Causality Test ◽  
Content Type ◽  
Financial Sector Development ◽  
Long Run ◽  
Integration Test ◽  
Short Run

Purpose – The purpose of this paper is to examine the relationship between financial sector development and poverty reduction in India using annual data from 1970 to 2012. The paper attempts to answer the critical question: does financial sector development lead to poverty reduction? Design/methodology/approach – Stationarity properties of the series are checked by using Ng-Perron unit root test. The paper uses the Auto Regressive Distributed Lag (ARDL) bound testing approach to co-integration to examine the existence of long-run relationship; error-correction mechanism for the short-run dynamics and Granger non-causality test to test the direction of causality. Findings – The co-integration test confirms a long-run relationship between financial development and poverty reduction for India. The ARDL test results suggest that financial development and economic growth reduces poverty in both long run and short run. The causality test confirms that there is a positive and unidirectional causality running from financial development to poverty reduction. Research limitations/implications – This study implies that poverty in India can be reduced by financial inclusion and financial accessibility to the poor. For a fast growing economy with respect to financial sector development this may have far-reaching implication toward inclusive growth. Originality/value – This paper is the first of its kind to empirically examine the causal relationship between financial sector development and poverty reduction in India using modern econometric techniques.

The Independence of Central Banks, Political Institutional Quality and Financial Sector Development in Africa

2020 ◽  
Vol 19 (2) ◽  
pp. 154-188
Author(s):  
Abel Mawuko Agoba ◽  
Joshua Yindenaba Abor ◽  
Kofi Achampong Osei ◽  
Jarjisu Sa-Aadu
Keyword(s):  
Financial Development ◽  
Political Institutions ◽  
Institutional Quality ◽  
Financial Sector ◽  
Developed Countries ◽  
African Countries ◽  
Jel Codes ◽  
Financial Sector Development ◽  
Legal Provisions ◽  
The Impact

Central Bank Independence (CBI) as a mechanism for achieving lower inflation and effective regulation and supervision of the financial sector should promote financial sector development. Though there is not much difference in CBI legal provisions, it seems to be more effective in developed countries than in African countries. There are suggestions that this could be due to differences in political institutional quality. Using panel data from 1970 to 2012, we find that CBI does not promote financial development in Africa. The impact of CBI is dependent on the level of development of a country. CBI promotes financial development more in countries with strong political institutions. JEL codes: E02; E44; E58

scholarly journals The Impact Of Inflation On Financial Sector Development: Experience From Zambia

2012 ◽  
Vol 28 (6) ◽  
pp. 1497 ◽  
Author(s):  
Nicholas M. Odhiambo
Keyword(s):  
Financial Development ◽  
Government Expenditure ◽  
Negative Relationship ◽  
Financial Sector ◽  
Bounds Testing ◽  
Financial Sector Development ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
The Impact

This study examines the impact of inflation on financial development in Zambia during the period between 1980 and 2011. The study attempts to answer two critical questions: 1) Is there a long-run relationship between inflation and financial sector development in Zambia? 2) Does inflation in Zambia have any negative effect on financial sector development? The study uses the recently developed ARDL-bounds testing approach to examine this linkage. In order to address the problem of omission of variable bias, the study incorporates other variables, such as government expenditure, trade volume and GDP per capita in the financial development model, alongside inflation thereby, creating a simple multivariate model. Using the domestic credit to the private sector as a proxy for financial development, the study finds that there is a long-run relationship between inflation and financial development in Zambia. The study also finds that there is a distinctively negative relationship between inflation and financial development. The results apply, irrespective of whether the model is estimated in the short run or in the long run.

scholarly journals Information asymmetry and conditional financial sector development

2017 ◽  
Vol 9 (4) ◽  
pp. 372-392
Author(s):  
Simplice Asongu ◽  
Jacinta Nwachukwu
Keyword(s):  
Information Asymmetry ◽  
Financial Development ◽  
Financial Sector ◽  
Policy Implications ◽  
African Countries ◽  
Content Type ◽  
Mean Values ◽  
Financial Sector Development ◽  
Negative Effect ◽  
The Impact

Purpose The purpose of this study is to examine the role of reducing information asymmetry (IA) on conditional financial sector development in 53 African countries for the period 2004-2011. Design/methodology/approach The empirical evidence is based on contemporary and non-contemporary quantile regressions. Instruments for reducing IA include public credit registries (PCRs) and private credit bureaus (PCBs). Hitherto unexplored dimensions of financial sector development are used, namely, financial sector dynamics of formalization, informalization, semi-formalization and non-formalization. Findings The following findings are established. First, the positive (negative) effect of information sharing offices (ISO) on formal (informal) financial development is consistent with theory. Second, ISOs consistently increase formal financial development, with the incidence of PCRs higher in terms of magnitude, and financial sector formalization, with the impact of PCBs higher for the most part. Third, only PCBs significantly decrease informal financial development and both ISOs decrease financial sector informalization. Policy implications are discussed. Originality/value The study assesses the effect of reducing IA on financial development when existing levels of it matter because current studies based on mean values of financial development provide blanket policy implications which are unlikely to be effective unless they are contingent on prevailing levels of financial development and tailored differently across countries with high, intermediate and low initial levels of financial development.

scholarly journals Financial Development, Economic Growth and Poverty Reduction in India: An Empirical Evidence

ETIKONOMI ◽  
2021 ◽  
Vol 20 (1) ◽  
pp. 13-22
Author(s):  
Md. Qaiser Alam ◽  
Md. Shabbir Alam
Keyword(s):  
Economic Growth ◽  
Empirical Evidence ◽  
Financial Development ◽  
Poverty Reduction ◽  
The Other ◽  
Development Economic ◽  
Impulse Response Functions ◽  
Response Functions ◽  
Long Run ◽  
Short Run

The paper examines the response of poverty reduction based on financial development and economic growth in India. The ARDL and ECM based model techniques analyze the long-run and short-run relationship among the variables in the model. The long-run estimates depict that financial development and economic growth have not significantly impacted poverty reduction and, on the other hand, resulted in injecting inequality and becoming attended to wealthier sections of the society. The short-run estimates show that financial development and economic growth have successfully tried to reduce poverty in India. The results flash a long-run nature of poverty in India and need to designs and formulations of policies that should be instrumental in reducing poverty. Impulse Response Functions' application indicates that poverty reduction will act as a catalyst for further poverty reduction in India.JEL Classification: I32, B26, O40, R15How to Cite:Alam, M. Q., & Alam, M. S. (2021). Financial Development, Economic Growth, and Poverty Reduction in India. Etikonomi: Jurnal Ekonomi, 20(1), 13 – 22. https://doi.org/10.15408/etk.v20i1.18417.

scholarly journals Financial sector development convergence in Africa: Evidence from bank- and market-based measures

2019 ◽  
Vol 8 (4) ◽  
pp. 166 ◽  
Author(s):  
Yakubu Awudu Sare ◽  
Eric Evans Osei Opoku ◽  
Muazu Ibrahim ◽  
Isaac Koomson
Keyword(s):  
Financial Markets ◽  
Financial Development ◽  
Generalized Method Of Moments ◽  
Financial Sector ◽  
Developed Countries ◽  
African Countries ◽  
Development Indicators ◽  
Developed Economies ◽  
Financial Sector Development ◽  
Catch Up

In this paper, we employ data from 46 African countries over the period 1980–2014 to examine financial sector development convergence, using bank- and market-based measures of financial development. Within the framework of the generalized method of moments (GMM), we present evidence that both the bank– and market–based financial sector development in Africa diverge over time. However, we find strong evidence of financial development divergence when using bank-based financial sector development indicators whereas this evidence is weaker for market-based indicators. Given the divergence in the level of finance, the gap between countries with underdeveloped and well–developed financial markets will continue to widen as financially less developed countries do not appear to catch-up with the financially more developed economies.  Keywords: Financial development; divergence, convergence, AfricaJEL Classification: F15, F36, G01, O55

scholarly journals Does financial and agriculture sector development reduce unemployment rates? Evidence from Southern African countries

2019 ◽  
Vol 65 (No. 5) ◽  
pp. 223-231 ◽  
Author(s):  
Gbolahan Olowu ◽  
Godwin Oluseye Olaseinde-Williams ◽  
Murad Bein
Keyword(s):  
Financial Development ◽  
Agricultural Sector ◽  
Value Added ◽  
African Countries ◽  
Causality Test ◽  
Negatively Associated ◽  
Agriculture Sector ◽  
Long Run ◽  
Financial Depth ◽  
Short Run

The paper examines empirically the impacts of agricultural sector value added and financial development on unemployment, using yearly data from 1995–2015. Eleven developing Southern African Development Community countries were selected for the study. The empirical analysis was carried out using second-generation econometric methods. The regression results revealed that both agricultural value added and financial development are important determinants of unemployment within the region. The results specifically show that agricultural value added is negatively associated with unemployment in both the short and long-run, although the long-run effect is many times bigger than the short-run impact. The results also show that in the long-run, both financial depth and financial efficiency are negatively associated with unemployment. Interactions between agricultural value added financial development and unemployment were further tested via panel bootstrap causality tests. The causality test results revealed the existence of significant one-way causality from agricultural value added to unemployment and from financial depth to unemployment for the region. It also showed that causality varies across individual countries within the region with different conditions, indicating the heterogeneous nature of the countries that make up the regional bloc.<br />

Towards Export-Led Growth in The West Africa Sub Region Economies

2020 ◽  
Vol 3 (2) ◽  
pp. 1-16
Author(s):  
Raphael Kolade Ayeni
Keyword(s):  
West Africa ◽  
Comparative Advantage ◽  
Developing Economies ◽  
Import Substitution ◽  
Strong Support ◽  
Growth Strategy ◽  
African Countries ◽  
The West ◽  
Long Run ◽  
Short Run

The policy of import substitution dominated developing economies especially Sub-Sharan African countries up till 1970. The focus later shifted to pursuing growth through increased export. Recently, countries of the West Africa Sub-region are clamoring for a revisit of growth through import substitution policies. This study therefore delved into the question of whether ECOWAS countries should go for import substitution growth strategy, or to develop strategy that promotes export-led growth, following the law of comparative advantage or a considerable mix of the two strategies. Using an export-augmented neoclassical production function, the study tested how relevant is the Export-led Growth Hypothesis for the ECOWAS sub-region over the period 1980-2014. Evidence does not offer a strong support for the Hypothesis in the short run but a strong evidence for improved capital stock and labor causing growth. However, long-run results suggest a significant relationship between export and growth but currently negative. A likely explanation of this negativity is that although exports, in the West African sub-regions has the tendency of increasing growth in the long run along with other factors of production, the present conditions of export, especially manufactured and agricultural exports, is experiencing a kind of “Import surge”. That is the import content of exports is high and the local content is low, thus reducing the spillover or multiplier effects. This was confirmed by the strong bilateral causality between export and import discovered in this study. A policy mix of import substitution and export promotion strategies was recommended for countries in this sub-region. Policies that will promote technological innovation in manufacturing and linkages with local suppliers alongside incentives to produce towards export are imperative. Production towards export should be focused on manufactured and agricultural products where each country has the highest comparative advantage so as to reduce the import content of the export.

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