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Impact of financial development on manufacturing output : The Nigerian evidence

Author

Listed:
  • Maxwell Ekor

    (Centre for the Study of the Economies of Africa (CSEA))

  • Oluwatosin Adeniyi

    (Centre for the Study of the Economies of Africa (CSEA))

Abstract

This study examined the influence of financial deepening on manufacturing output in Nigeria. Using the vector autoregression (VAR) based Johansen cointegration technique and an eventual least squares (OLS) estimator on annual data spanning 1970 to 2010, we find insignificant coefficients for credit to the manufacturing sector, banking efficiency and the non-oil trade balance. This suggests a fundamental disconnect between the real and financial sectors of the Nigerian economy. Policymakers should therefore innovate with productivity enhancing reforms which are better tailored to the needs of the manufacturing sector. This should work to boost growth prospects for the aggregate economy.

Suggested Citation

  • Maxwell Ekor & Oluwatosin Adeniyi, 2012. "Impact of financial development on manufacturing output : The Nigerian evidence," Economics Bulletin, AccessEcon, vol. 32(3), pages 2638-2645.
    • Handle: RePEc:ebl:ecbull:eb-12-00557
    as

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    References listed on IDEAS

    as
    1. Barro, Robert J. & Lee, Jong-Wha, 1993. "International comparisons of educational attainment," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 363-394, December.
    2. Barro, Robert J. & Lee, Jong-Wha, 1994. "Sources of economic growth," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 40(1), pages 1-46, June.
    3. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
    4. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    5. Sala-i-Martin, Xavier, 1997. "I Just Ran Two Million Regressions," American Economic Review, American Economic Association, vol. 87(2), pages 178-183, May.
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    Cited by:

    1. Taiwo Akinlo & Dauda Olalekan Yinusa & Akintoye Victor Adejumo, 2021. "Financial development and real sector in sub-Saharan Africa," Economic Change and Restructuring, Springer, vol. 54(2), pages 417-455, May.
    2. Adeniyi, Oluwatosin & Oyinlola, Abimbola & Omisakin, Olusegun & Egwaikhide, Festus O., 2015. "Financial development and economic growth in Nigeria: Evidence from threshold modelling," Economic Analysis and Policy, Elsevier, vol. 47(C), pages 11-21.
    3. Alarudeen Aminu Ph.D & Isiaka Akande Raifu & Bolanle Deborah Oloyede, . "Financial Development and Manufacturing Output Growth Nexus in Nigeria: The Role Of Institutional Quality," Journal of Economic and Sustainable Growth 2, Office Of The Chief Economist, Development Bank of Nigeria.

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    More about this item

    Keywords

    Financial sector; Economic growth; Economic reform;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G2 - Financial Economics - - Financial Institutions and Services

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