The Impact of Financial Sector on Economic Development in Nigeria

The financial sector which includes banks insurance companies capital markets and other financial institutions is critical to a country's economic growth and sustainability. The major goal of this research project is to examine the impact of the financial sector on economic development in Nigeria with time series data from the World Development Indicator and the Central Bank of Nigeria Statistical Bulletin serving as secondary data sources. It was estimated using ordinary least square techniques. The Co-integration test result indicates the presence of a long-run consistent link between the variables. The findings demonstrated that owners' equity total savings and liquidity ratio have a favorable and significant impact on economic development. Thus far the study provides robust evidence that financial sector activities had a significant impact on Nigeria's economic development during the time period analyzed. However it is advised that Nigeria maintain a higher degree of macroeconomic stability as well as minimize the significant proportion of non-performing loans by making sure private sector funds are directed to the real sector of the economy.