Financial Deepening, Financial inclusion, Economic development, Nigeria


This study investigates the relationship between financial deepening and socioeconomic development in Nigeria. The specific objectives examined the impacts of broad money supply, private sector credit and financial openness on human development index in Nigeria from 1991 to 2018. Time series data on each of the variables were analyzed using Fully Modified Least Squares and Granger Causality test. The unit root test results revealed that all the variables in the model became stationary after first difference and are all I (1). The cointegration test result revealed that the variables had long run relationships. The cointegrating regression result indicated that broad money supply had significant negative relationship with HDI. A 1 percent increase in broad money supply would lead to 0.0103 reductions in the HDI score. On the other hand, private sector credits and financial openness index were found to exert significant positive impact on HDI. The causality test results indicate that unidirectional causality runs from broad money supply and credit to the private sector, to HDI. It was equally found that bidirectional causality exists between financial openness and HDI as well as joint causality flowing from all the explanatory variables to HDI. This finding implied that the explanatory variables collectively have the power of predicting changes in HDI. Hence, it was concluded amongst others that CBN should support more crossborder mobility of capital in order to provide opportunities for free flow of financial products and services to facilitate the process of socio-economic development.

Author Bio

Mr. Igonibo Dumoteim Abili is a staff of Central Bank of Nigeria, Yenagoa Branch

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