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Financial deepening and sectoral performance in emerging markets: evidence from the Nigerian agricultural and manufacturing sectors

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  • Tabash, Mosab I.
  • Afolabi, Babatunde
  • Adelakun, Johnson
  • Astuwa, Ruth

Abstract

Purpose. The formal sector in Nigeria has experienced some transformation in the last 20 years. This has led to advancement and deepening of sector. Despite the progression achieved in financial sector, it has not yielded the desired impacts on the economy as experienced in other emerging economies. Hence, this research assessed the advantageous effects of financial deepening on sectoral advancement in Nigeria. Methodology / approach. The research used the proxies of broad money (M2) to GDP ratio, and the ratio of credits to private sector to GDP for financial deepening. The data regarding time series were retrieved from Thomson Reuters DataStream and Augmented Dickey-Fuller unit root test and Johansen co integration approaches used for the long-oriented effects and Error Correction approach for short orientation estimation. Results. The impact of financial deepening was positive and statistically significant in explaining agricultural growth, but the performance of the manufacturing sector was not significantly impacted in the reviewed period, hence government should make efforts to reduce the interest rate on loan bestowed to the private sector. Originality / scientific novelty. The variables assortments have never been describing in the literature. Particularly, this study considers financial deepening as a significant determinant of sectoral development in the Nigerian context. Practical value / implications. According to the results of the study, it is recommended to increase credits to the manufacturing sector through specialized banks and ensures the growth of the financial industry in terms of provision of quality financial instruments, sound financial and money markets, and transparent legislation for healthy competition in the industry for better sectoral performance.

Suggested Citation

  • Tabash, Mosab I. & Afolabi, Babatunde & Adelakun, Johnson & Astuwa, Ruth, 2022. "Financial deepening and sectoral performance in emerging markets: evidence from the Nigerian agricultural and manufacturing sectors," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(01), March.
    • Handle: RePEc:ags:areint:320043
    DOI: 10.22004/ag.econ.320043
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    References listed on IDEAS

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    1. repec:bla:afrdev:v:29:y:2017:i:s1:p:15-26 is not listed on IDEAS
    2. Alif Darrat, 1999. "Are Financial Deepening and Economic Growth Causally Related? Another Look at the Evidence," International Economic Journal, Taylor & Francis Journals, vol. 13(3), pages 19-35.
    3. Asli Demeirgüç-Kunt & Ross Levine (ed.), 0. "Finance and Growth," Books, Edward Elgar Publishing, number 17119.
    4. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 261-300.
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    1. Hua Zhang & Ying Li & Hanxiaoxue Sun & Xiaohui Wang, 2023. "How Can Digital Financial Inclusion Promote High-Quality Agricultural Development? The Multiple-Mediation Model Research," IJERPH, MDPI, vol. 20(4), pages 1-19, February.

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    Keywords

    Agricultural Finance; Financial Economics;

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