FINANCIAL INTERMEDIATION AND ECONOMIC DEVELOPMENT IN NIGERIA:1987 – 2020

Abstract

This study aims to investigate the effect of financial intermediation on economic development in Nigeria, spanning 1987 to 2020. Specifically, the study seeks to examine the effect of Financial Intermediation on human capital development in Nigeria. The study employed the ex-post facto research design while the data (secondary) were selected from CBN Statistical bulletin and World Bank development index. Financial intermediation was captured with money supply, credit to private sector, total credit, total savings, interest rate, and inflation rate as the independent variables. The economic development indicator selected and investigated is the Human capital development (HDI) used as dependent variables. The preliminary tests included the descriptive statistics and unit root test with ADF.  The model was subjected to regression analyses based on Johansson cointegration and error correction mechanism. The post estimation being the diagnostics showed that the models were reliable. The regression results showed that: financial intermediation has long and short run effect on human capital development. The study thus conclude that financial intermediation is a veritable process for boosting economic development in Nigeria as it has significantly impacted the economic development indicator both at long and short run periods. This shows that effective intermediation is key to sustainable development in Nigeria. The study among others recommends strict supervision of financial service providers in Nigeria to sharpen the role of the financial institutions in driving the economy.