Financial Structure and Economic Growth: The Nigerian Experience, 1980-2017

  • Emeka Nkoro Department of Economics, University of Port Harcourt, Nigeria
  • Aham Kelvin Uko Ministry of Environment, Abia State, Nigeria
Keywords: Stock Market, Financial Market, Financial Structure, Economic Growth, Vector Error Correction Model.


This study investigated the role of financial structure in explaining economic growth dynamics in Nigeria using annual time series from 1981-2017. The study employed the vector error correction model (VECM) in the analysis of the data. As lead up to financial structure and economic growth relationship analysis, the competing theoretical views of bank and market based financial system and economic growth were explored. The result of the study showed that economic growth, financial development variables and the underlying control variables are cointegrated. The result of the economic growth effect of financial development showed that stock market and bank-based have a significant effect on growth. This implies that both bank-based and market-based matter in explaining economic growth dynamics.  On the relationship between financial structure and economic growth, the study revealed that economic growth, financial structure and the underlying control variables have a long run relationship. The study also revealed that financial structure which captures the combination of stock market-based and bank-based has a positive significant effect on growth. A significant coefficient of financial structure implies that financial structure matters in explaining growth. Therefore, the study posits that the overall financial structure is the most useful way to assess the financial systems since both bank and stock market system matter in explaining economic growth as against bank-based versus market-based debate. Based on the empirical evidence, the study therefore recommends that there should be continuous holistic reforms of both banking and stock market simultaneously, as the development in one sector has a neglect effect on the other.


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How to Cite
Nkoro, E., & Uko, A. K. (2019). Financial Structure and Economic Growth: The Nigerian Experience, 1980-2017. American Economic & Social Review, 5(1), 33-48.