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Financial Deepening and Economic Growth Nexus in Nigeria: Supply-Leading or Demand-Following?

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Department of Economics, Niger Delta University, Wilberforce Island, P.O. Box 1464, Yenagoa 560001, Bayelsa State, Nigeria
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Department of Economics, Faculty of the Social Sciences, University of Nigeria, Nsukka 410001, Enugu State, Nigeria
*
Author to whom correspondence should be addressed.
Academic Editor: Tapas Mishra
Economies 2017, 5(1), 4; https://doi.org/10.3390/economies5010004
Received: 15 October 2016 / Revised: 4 December 2016 / Accepted: 7 January 2017 / Published: 23 January 2017
This paper examined the direction of causality between financial deepening and economic growth in Nigeria for the period 1970–2013. The study adopted the Toda–Yamamoto augmented Granger causality test and results showed that the growth-financial deepening nexus in Nigeria follows the supply-leading hypothesis. This means that it is financial deepening that leads to growth and not growth leading financial deepening. Among other things, the study recommended that policy efforts should be geared towards removing obstacles that undermine the growth of credit to the private sector, and must restore investors’ confidence in the stock market operations. View Full-Text
Keywords: financial deepening; economic growth; supply-leading hypothesis; Toda–Yamamoto augmented Granger causality financial deepening; economic growth; supply-leading hypothesis; Toda–Yamamoto augmented Granger causality
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Karimo, T.M.; Ogbonna, O.E. Financial Deepening and Economic Growth Nexus in Nigeria: Supply-Leading or Demand-Following? Economies 2017, 5, 4.

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