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Financial Deepening Implications for Macro-economic Volatility and Economic Growth in Nigeria, A Multivariate Approach
International Journal of Economics, Finance and Management Sciences
Volume 5, Issue 1, February 2017, Pages: 66-80
Received: Nov. 15, 2016; Accepted: Dec. 1, 2016; Published: Jan. 12, 2017
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Authors
Anuli Regina Ogbuagu, Department of Economics and Developmental Studies, Federal University, Ndufu –Alike Ikwo, Nigeria
Dennis Brown Ewubare, Department of Agriculture and Applied Economics/Ext, Rivers State University of Science and Technology, Port Harcourt, Nigeria
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Abstract
This paper investigates the relationship between financial depth, macroeconomic volatility, and economic growth in Nigeria using a general model of error correction and causality model with time series sourced from Central Bank of Nigeria Bulletin 2012. The result shows a long-run impact of financial deepening on exchange rate volatility and economic growth while the error correction term indicates that there is no long-run impact of financial depth on growth volatility. On one hand, there is no short run impact of financial depth on exchange rate and growth volatility though most of the financial deepening variables show signs of dampening the volatility of exchange rate and growth. On the other hand, the error correction result suggests that there is a long-run and short-run impact of financial deepening on economic growth. The causality result showed no causality between financial deepening variable, economic growth, and growth volatility but a unidirectional causality between exchange rate volatility, stock traded, stock market capitalization, and broad money. We therefore, suggest that government and policy makers to embrace policies that will deepen financial services in Nigeria.
Keywords
Financial Deepening, Macroeconomic Volatility, Economic Growth, Exchange Rate, Error Correction, Causality
To cite this article
Anuli Regina Ogbuagu, Dennis Brown Ewubare, Financial Deepening Implications for Macro-economic Volatility and Economic Growth in Nigeria, A Multivariate Approach, International Journal of Economics, Finance and Management Sciences. Vol. 5, No. 1, 2017, pp. 66-80. doi: 10.11648/j.ijefm.20170501.16
Copyright
Copyright © 2017 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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