Overview of the nigerian financial sector and economy finance essay
This was used as proxy for economic growth the dependent variable. Review of Related Literature Role of Financial Intermediaries Fund suppliers cannot loan money directly to fund raisers, nor can fund raisers borrow money directly from fund suppliers.
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The basic question that this paper would answer is: Do better functioning financial intermediaries exert a causal influence on economic growth? The worst candidates adverse are more likely to be selected for the transaction. This statement also motivated others into studying the relationship between finance and economic growth. In this model the financial development variable is included in an endogenous growth model. Financial Intermediaries and Asymmetric Information Financial markets have a lot of asymmetric information. From the panel 1 perspective, Fry ; Beck et al. Recently, Narayan argues that existing critical values which are based on large sample sizes cannot be used for small sample sizes. Banks are the largest financial intermediaries in the Nigerian economy.
The model is estimated with the error correction term in order to capture its long-run speed of adjustment.
Model The empirical link between financial development and economic growth to be estimated in this paper is adapted from a simple model developed by De Gregorio and Guidotti and Abduroluman Banks are the largest financial intermediaries in the Nigerian economy.
Investment intermediaries are made up of investment companies and finance companies. This statement also motivated others into studying the relationship between finance and economic growth. Other studies focus on the impact of financial intermediation on economic growth, and the impact of economic growth on financial intermediation Nieh et al.
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Data Data for this study are purely secondary data. These instruments consist of insurance plan, savings, annuity, pension, and loan privileges. The model shows how indicators of financial development through economic relations turn to have an impact on economic growth. In this model the financial development variable is included in an endogenous growth model. A close view of the major results shows developing countries are more likely to report a negative impact of financial development on economic growth. Generally, using the lag operator L applied to each component of a vector. Table 3. Table 1.
What is the Nigerian evidence? This statement motivated King and Levine to empirically test the logic behind this statement. Private investment This variable captures gross formation of fixed capital, and permits us to see how investment increases output which subsequently leads to economic growth.
The study employed the use of linear model which expressed economic growth as a function of lagged economic growth, and financial development indicators banks, savings, and loan-budget ratio.
The choice of variable is inspired by the fundamental role of public expenditure in spurring economic activities and development.
However, there has been a widespread believe among policy makers that financial development enhances productivity and thus promotes growth.
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Despite the overwhelming evidence that financial system development has a positive impact on economic growth in panel 1 and 2, alternative points of views still exist. The choice of variable is inspired by the fundamental role of public expenditure in spurring economic activities and development. The model is estimated with the error correction term in order to capture its long-run speed of adjustment. There are a number of studies that provide evidence in support of the fact that financial development has a negative impact on economic growth. The general name for the services supplied by financial intermediaries is financial intermediation. In addition, from panel 2 perspective, Tabi et al. Also, this technique can be applied irrespective of whether the variable is I 0 , I 1 or fractionally co-integrated Pesaran
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