Financial deepening and human development in Nigeria: A non-linear approach

Abstract

Objective: The study investigated the effect of credit supply on GDP on Human Development and as well examined the impact of Money supply on GDP on human development. It equally assessed the link between bank penetration and human development and the link between financial intermediation and human development.

Research Design & Methods: This study used ex-post facto research design and a Non-Linear Autoregressive Distributed Lag (Asymmetry ARDL) to estimate the effect of financial deepening on human development. Eview 11 was used for the analysis.

Findings: This research work discovered that the positive contribution of credit supply and money supply to human development in Nigeria is weak and the relationship between financial deepening and development is not always linear. The study revealed that the effect of branch expansion in Nigeria is negative because of limited bank products or services.

Implications & Recommendations: The implication of this study is that expansionary monetary policies have the most significant positive impact on human development in Nigeria. The expansionary policy can as well worsen human development through inflationary pressure while a contractionary policy is an anti- human development approach and its effects on human development are negative. The study therefore recommends that: The central bank of Nigeria should place more emphasis on expansionary monetary tools to drive development and be cautious of inflation. CBN and banks should monitor their credit to avoid loan diversion by the beneficiaries and to beat extreme poverty.

Contribution & Value Added: The study used asymmetry ARDL model as an improvement over the conventional regressions that the previous authors have been using to examine the link between financial deepening and human development.

Keywords

Financial Deepening, Money Supply, Credit Supply, Human Development, Asymmetric ARDL

Author Biography

Mutiu Adeniyi Afolabi

PhD Student in Economics at Osun State University and a permanent lecturer in the Department of Banking and Finance, Federal Polytechnic Offa, Kwara State. His area of interests are applied economics, econometrics, investment analysis, Business finance, Finance in the global market and financial management. He has researched extensively in development and financial economics. He is a CIBN examiner in Public Finance, International Finance and E-Payment Operations. HND (B&F), B.Sc. (Eco), MNES, M.Sc. (B&F), M.Sc. (Eco), PhD (Eco) in view, FCIB.

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