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An Empirical Investigation of the Relationship between Financial Development and Merchandise Trade in Nigeria

Author

Listed:
  • Adeboje Oluwafemi Mathew

    (Research, Policy & International Relations Department, Nigeria Deposit Insurance Corporation, Abuja.)

  • Raifu Isiaka Akande

    (Department of Economics, Faculty of Economics and Management Sciences, University of Ibadan.)

  • Ogbeide Frank I.

    (Ph.D. is a Principal Economist in the Research, Policy & International Relations Department, Nigeria Deposit Insurance Corporation, Abuja.)

  • Orija Olusegun Abiola

    (Department of Economics, Faculty of Economics and Management Sciences, University of Ibadan.)

Abstract

This study examines the empirical relationship between financial development and merchandise trade in Nigeria using annual data from 1981 to 2014. The empirical analysis is also carried out on the disaggregated components of the trade, that is, merchandise export and import, for robust analysis. Estimation results based on error correction model show that there exists significant long run positive relationship between financial development and export in Nigeria over the period under study. There is need for government to therefore provide enabling environment for financial sector to thrive through sound macroeconomic policies for effective economic diversification through export.

Suggested Citation

  • Adeboje Oluwafemi Mathew & Raifu Isiaka Akande & Ogbeide Frank I. & Orija Olusegun Abiola, 2021. "An Empirical Investigation of the Relationship between Financial Development and Merchandise Trade in Nigeria," Zagreb International Review of Economics and Business, Sciendo, vol. 24(1), pages 1-20.
    • Handle: RePEc:vrs:zirebs:v:24:y:2021:i:1:p:1-20:n:1001
    DOI: 10.2478/zireb-2021-0001
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    References listed on IDEAS

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    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
    2. Chan, Jackie M.L. & Manova, Kalina, 2015. "Financial development and the choice of trade partners," Journal of Development Economics, Elsevier, vol. 116(C), pages 122-145.
    3. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    4. Fernando Leibovici, 2021. "Financial Development and International Trade," Journal of Political Economy, University of Chicago Press, vol. 129(12), pages 3405-3446.
    5. Mohammad Shahbaz, 2009. "A Reassessment of Finance-Growth Nexus for Pakistan: Under the Investigation of FMOLS and DOLS Techniques," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 65-80, January.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Error correction model; merchandise trade; financial development;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F49 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Other
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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