ISSN: 2225-8329
Open access
This study examined the effect of financial deepening on entrepreneurial growth in Nigeria. Following the approach of the Granger Causality test with Autoregressive Distribute Lag (ARDL) technique of model estimation using data from 1986 to 2018, there is no significant effect of financial deepening on entrepreneurial growth. Entrepreneurial growth was found to have significantly influenced financial deepening through banking and insurance sector deepening. Consequently, the Central Bank of Nigeria (CBN) should encourage commercial banks to lend more for entrepreneurial activities which will in turn improve our gross domestic product. This can be achieve if the CBN can lower its monetary policy rate to a single digit as against the current double digit (14%). It would be ideal for the government (Federal, State and Local) to establish entrepreneurial training/skill acquisition centres in all tertiary institutions in the country. This will help a large fraction of the graduates of these institutions to inculcate entrepreneurial spirit to setting up small and medium scale enterprises in every part of the country.
1. Ademola, A. F., & Obamuyi, T. M. (2018). Financial Deepening and the Performance of Manufacturing Firms in Nigeria. Canadian Social Science, 14(6), 87-96.
2. Akhator, A. P., & Marcus, G. O. (2018). Financial deepening and economic development of Nigeria: an empirical investigation. Veritas International Journal of Entrepreneurship Development, 1(1), 125-139.
3. Alenoghena, R. C. (2014). Capital market, financial deepening and Nigeria’s economic growth: Co-integration and error correction model approach. Global Journal of Commerce and Management Research, 3(3), 1826.
4. Becsi, Z., & Wang, P (1997). Financial Development and Growth. Federal Reserve Bank of Atlanta Economic Review, 3(4), 46–62.
5. Eke, P. O., Okoye, L. U., & Evbuomwan, G. O. (2017). Entrepreneurship and financial deepening in selected African Economies: Does human capital development matter? Innovation Management and Education Excellence through Vision 2020, 6258-6273.
6. Greenwood, J., & Jovanovic, B. (1990). Financial development, growth and the distribution of income. Journal of Political Economy, 98(5), 1076-1107.
7. John, E. I., & Ibenta, S. N. (2017). Financial deepening and entrepreneurial growth in Nigeria. Research Journal of Finance and Accounting, 8(20), 40-51.
8. Levine, R. (2002). Bank-based or market-based financial systems: which is better? Journal of Financial Intermediation, 11(4), 398 – 428.
9. Karimo, T. M., & Ogbonna, O. E. (2017). Financial deepening and economic growth nexus in Nigeria: Supply-leading or demand following? Economies, 5(4), 2-18.
10. Kiprop, J. G. (2013). The relationship between financial deepening and the growth of small and medium enterprises in Kenya, (Master’s Thesis, University of Nairobi, Kenya).
11. McKinnon, R. I. (1973). Money and capital in economic development, Brookings Institution, Washington, DC, USA.
12. Maduka, A. C. (2012). The impact of financial deepening on domestic investment in Nigeria. ANSU Journal of Arts and Social Sciences, 1(1), 46-57.
13. Montiel, P. J. (1996). Financial policies and economic growth: theory, evidence and country- specific experience from Sub-Saharan Africa. Journal of African Economies, Centre for the Study of African Economies (CSAE), 5(3), 65-98.
14. Nwakobi, P. C., Oleka, D. C., & Ananwude, A. C. (2019). Effect of financial deepening on economic growth in Nigeria: A time series appraisal (1986-2018). Asian Journal of Advanced Research and Reports, 7(3), 1-9.
15. Nwakoby, C. I. N., & Ananwude, A. C. (2016). The role of non-bank financial institutions on financial intermediation process in Nigeria (1992-2014). British Journal of Economics, Management & Trade, 14(4), 1-15.
16. Nwanna, I. O., & Chinwudu, C. F. (2016). The effect of financial deepening on economic growth in Nigeria (1985-2014). Journal of Economics and Finance, 7(5), 11-28.
17. Nzotta, S. M., & Okereke, E. J. (2009). Financial deepening and economic development of Nigeria: An empirical investigation. African Journal of Accounting, Economics, Finance and Banking Research, 5(5), 52-66.
18. Ohwofasa, B. O., & Aiyedogbon, J. O. (2013). Financial deepening and economic growth in Nigeria, 1986-2011: an empirical investigation. Journal of Economics and Development Studies, 1(1), 24-42.
19. Okafor, I. G., Onwumere, J. U. J., & Ezeaku, H. C. (2016). Financial deepening indicators and economic growth in Nigeria: a causality and impact analysis. Asian Journal of Economics, Business and Accounting, 1(2), 1-11.
20. Omoruyi, E. M. M., Olamide, K. S., Gomolemo, G., & Donath, O. A. (2017). Entrepreneurship and economic growth: Does entrepreneurship bolster economic expansion in Africa? Journal of Socialomics, 6(4), 1-11.
21. Ovat, O. O. (2013). Liquidity constraints and entrepreneurial financing in Nigeria: The fate of fresh graduate entrepreneurs. Global Journal of Management and Business Research Finance, 13(9), 35-42.
22. Paramaditha A. Analysis: The importance of financial deepening in Indonesia; 2015. (Accessed on: 22/12/2018) Available: https://www.thejakartapost.com/news/2015/02/18/analysis-the-importance financial-deepening-indonesia.html.
23. Shaw, E. (1973). Financial deepening in economic development, New York: Oxford University Press.
24. Soedarmono, W., Trinugroho, I., & Sergi, B. S. (2017). Thresholds in the nexus between financial deepening and firm performance: Evidence from Indonesia. Retrieved from www.ssrn.com.
25. Wujung, V. A., & Fonchamnyo, D. C. (2016). The role of financial development on private entrepreneurship in Cameroon. Journal of Economics and Sustainable Development, 7(21), 118-124.
To cite this article: Nwajiaku, E. O., Ananwude, A. C., Obi-Nwosu, V. (2020). Financial Deepening and Entrepreneurial Growth in Nigeria: A Time Series Analysis (1986-2018), International Journal of Academic Research in Accounting, Finance and Management Sciences 10 (2):257-263.
Copyright: © 2020 The Author(s)
Published by HRMARS (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode