Financial liberalization, Savings mobilisation, Financial reform


Financial liberation involves the elimination of credit, controls, deregulation of interest rates, easing of entry into the financial services industry, development of capital markets, increased prudential regulation and supervision, and liberalization of international capital flows. This paper assess the impact of financial sector reforms in Nigeria, especially on the development of the financial sector. Accordingly, the paper dwells on theoretical issues and brief review of literature and presented a brief analysis of financial sector reforms in Nigeria. Attempt is also made to assess the impact of the reforms. Furthermore, the paper analyzes the roles of the indicators that are studied in the recent literature. Ten indicators that encompass all the qualities of a well developed financial sector were selected to measure the impact of financial sector deregulation on the economy. The six measures included: Broad Money as a ratio of Gross Domestic Product (GDP), Private Credit as a ratio of GDP, Currency Outside Bank as a ratio of Broad Money (M2), Interest Rate Spread, that the financial system will continue to flourish without adequately affecting the real economy even in the era of deregulation if the banks in particular, continue to trade in foreign exchange and finance trading activities at the expense of the manufacturing sector. Again the fiscal operation of government that resulted in persistent deficits mainly financed by the central bank in most of the liberalisation era that resulted in very high inflation, adversely affected macroeconomic stability, setting in motion a vicious cycle of external and internal imbalances.

Author Bio

The author is a staff of West African Monetary Institute, Accra, Ghana.

Publication Title

CBN Bullion







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