Finance and Growth Nexus in Nigeria: Do Bank-Based and Market-Based Argument Matter?

Augustine Ujunwa, Ogbuagu Ekumankama, Halidu Ahmad, Umar, Mahmud Ibrahim, Adamu


This paper contributes to the finance and growth debate by examining the channels through which bank and
market promote economic growth in Nigeria. The paper used 17 years time series data, 1992-2008, to fill this
knowledge gap. The formulated models were estimated with the Ordinary Least Square regression. The growth
rate of GDP per capita was adopted as the dependent variable, while bank size, bank activity, bank efficiency,
market size, market activity and market efficiency were adopted as the independent variables. The regression
coefficient for bank size, bank efficiency, market size and market efficiency were positive in promoting
economic growth. However, the coefficient of bank activity and market activity were negative in promoting
economic growth in Nigeria. The finding of the study relegates the financial structure arguments to the shadows,
and recommends for favourable macroeconomic environment that will allow for the development of the
financial system.

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