The impact of financial liberalization and economic growth in Nigeria

The study examined financial liberalization and the Nigerian economy: an impact assessment over the period 1987 to 2024. Using secondary data sourced from the Central Bank of Nigeria's Statistical Bulletin and the National Bureau of Statistics, the study employed the Autoregressive Distributed Lag (ARDL) model, as Well as Unit root and bounds cointegration tests, to determine the stationarity properties and long-run relationships among the variables. The results reveal a statistically significant long-run cointegrating relationship among the variables. The ARDL cointegrating and long run estimates reveals that, the independent variables; MSGDP, BSGDP, PSGDP and SMGDP, will have a joint significant negative effect on the gross domestic product growth rate in Nigeria.  The ARDL further reveals that broad money supply to GDP will in both long and short run exert non-significant impact on GDP growth rate. Private sector credit to GDP in the long run will have a statistically non-significant impact on GDP growth rate in Nigeria. While the short-run estimates revealed that private sector credit to GDP had a significant impact on GDP growth rate in Nigeria. Banking sector deposit to GDP on the other hand will have a statistically significant impact on GDP growth rate in Nigeria both at the long run and short-run. Stock market capitalization to GDP will also exert a statistically significant impact on GDP growth rate while short-run estimates revealed non-significance. The study concludes that while financial liberalization holds potential to spur economic growth, its benefits remain unrealized without complementary structural and institutional reforms. Recommendations among others include deepening the Stock Market by encouraging more listings on the Nigerian Exchange through reducing listing requirements for viable firms, and supporting SMEs to access equity financing which will broaden market capitalization and strengthen its growth impact.