Financial Deepening and the Performance of Manufacturing Firms in Nigeria

Adeyefa Felix Ademola, Obamuyi Tomola Marshal

Abstract


This study investigated the effect of financial deepening on the performance of manufacturing firms in Nigeria from 1970 to 2016. The data were sourced from the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics. The model was specified, and the hypotheses were tested with the Autoregressive Distributed Lag model and Mann-Whitney U Test test. The Augmented Dickey-Fuller, Phillips-Perron and Breusch-Pagan-Godfrey tests were carried out to ensure robust regression results. Results obtained from the study revealed that broad money supply has direct and significant impact on index of manufacturing production (p-value= 0.0039) in Nigeria, credit to private sector has indirect and insignificant impact on index of manufacturing production (p-value= 0.1167) in Nigeria and market capitalization has an indirect and significant impact on index of manufacturing production (p-value= 0.0051) in the long-run and a direct and insignificant impact (p-value= 0.1596) in the short-run. The study also discovered that financial deepening impacted more on the manufacturing sector performance in the post-financial reforms period. The study therefore recommended that government should launch new financial reforms capable of enhancing the accessibility of manufacturing sector to credit and ensure adequate implementation and monitoring of the existing policies on financial reforms in Nigeria with a view to deepening the Nigerian financial system and thereby promoting manufacturing firms’ performance in Nigeria.


Keywords


Financial deepening; Manufacturing firms; Financial reforms; Broad money supply

Full Text:

PDF

References


Aiyetan, I. R., &Aremo A. G. (2015). effect of financial sector development on manufacturing output growth in Nigeria. Journal of Applied Economics and Business Research, 5(1), 38-55.

Amakom, U. (2012). Manufactured exports in Sub-Saharan African economies: Econometric tests for the learning by exporting hypothesis. American International Journal of Contemporary Research, 2(4), 195-206.

Atoyebi, K. O., Ishola, S. A., Adekunjo, F. O., Kadiri K. I., & Ogundeji, M. O. (2013). The linkage between capital formation and capacity utilization of manufacturing sector in Nigeria. Journal of Humanities and Social Science, 6(6), 48-59.

Ayila, N., Akighir, D. T.,&Iorember, P. T. (2014).financial deepening and economic growth in Nigeria: An ARDL Model Approach, Journal of Economic Studies, 11(1), 18-31.

Bernard, O. A., & Adenuga, O. (2011). Impact of Economic Reforms on Performance of the Manufacturing Sector in Nigeria. Retrieved from http://ssrn.com/abstract=2717655

Central Bank of Nigeria. (2016).Statistical Bulletin,27.

Emeka, N., & Aham, K. U. (2013). Financial sector development-economic growth Nexus: Empirical evidence from Nigeria. American International Journal of Contemporary Research, 3(2), 1-13.

Ewetan, O. O., & Ike, D. N. (2014). Does financial sector development promote industrialisation in Nigeria. International Journal of Research in Social Sciences, 4(1), 17-25.

Garba, S. B. (2014). Financial sector development and economic growth in nigeria: an empirical investigation, International Journal of Finance and Accounting, 3(4), 253-265.

Goswami, M., & Sharma, S. (2011, June). The Development of Local Debt Markets in Asia, IMF Working Paper(No.11/132). Retrieved from https://books.google.com.ng/books? hl=en&lr=&id=w9dQLTdP95AC&oi=fnd&pg =PA 3 &dq = Goswami, +M.,+and+S.+Sharma,+(2011).The+Development+of+Local+Debt +Markets +in+Asia,+IMF+Working+Paper+No.+WP/11/v=onepage&q&f=false

Imoughele, L. E., & Ismaila, M. (2014). Empirical investigation of the impact of monetary policy on manufacturing sector performance in Nigeria (1986–2012). International Journal of Education and Research, 2(1), 1-20.

King, R., & Levine, R. (1993). Finance, entrepreneurship and growth: Theory and evidence. Journal of Monetary Economics, 32(4), 513–543.

Levine, R. (2005). Finance and growth: theory and evidence, In P. Aghion, & S. N. Durlauf (Eds.), Handbook of Economic Growth.

Mesagan, E. P., &Ezeji, A. C. (2016). The role of social and economic infrastructure in manufacturing sector performance in Nigeria. Retrieved from https://mpra.ub.uni–muenchende/78310 /MPRA_paper _78310

Mordkof, J. T. (2016). The assumption(s) of normality. Retrieved from http://www2.psychology. uiowa.edu/faculty/mordkoff/GradStats/part%201/I.07%20normal.pdf.

Nzotta, S. M., & Okereke, E. J. (2009). Financial deepening and economic development of Nigeria: An empirical Investigation. African Journal of Accounting, Economics, Finance and Banking Research, 5(5), 52-62.

Obamuyi, T. M., Edun, A. T., & Kayode, O. F. (2012). Bank lending, economic growth and the performance of the manufacturing sector in Nigeria. European Scientific Journal, 8(3), 19-36.

Odior, E. S. (2013). Macroeconomic variables and the productivity of the manufacturing sector in Nigeria: A static analysis approach, Journal of Emerging Issues in Economics. Finance and Banking, 1(5), 362-380.

Ogar, A., N., kamare, S. E., & Effiong, C. (2014). Commercial bank credit and its contributions on manufacturing sector in Nigeria. Research Journal of Finance and Accounting, 5(22), 188-196.

Ohwofasa, B. O., & Aiyedogbon, J. O. (2013). Financial deepening and economic growth in Nigeria: An empirical investigation. Journal of Economics and Development Studies, 1(1), 22-42.

Ojong, C. M., Anthony, O., & Arikpo, O. F. (2017). Financial deepening and manufacturing sector growth in Nigeria. International Journal of Development Research, 7(1).

Olanrewaju, O. G., Aremo, A. G., & Aiyegbusi, O. O. (2015). Banking sector reforms and output growth of manufacturing sector in Nigeria. Journal of Economics and International Finance,7(8), 183-191.

Patrick, H. T., (1966). Financial development and economic growth in undeveloped countries. Economic Development and Cultural Change, 14 (2), 429-447.

Torruam, J. T., Chiawa, M. A., & Abur, C. C. (2013, April). Financial deepening and economic growth in Nigeria: An application of cointegration and causality analysis. 3rd International conference on intelligent computational systems (ICICS 2013), , Singapore.

Werigbelegha, A. P., & Ogiriki, T., (2015). Determinants of stock market performance and manufacturing sector growth in Nigeria. Research Journal of Finance and Accounting, 6(6), 153-160.




DOI: http://dx.doi.org/10.3968/10395

Refbacks

  • There are currently no refbacks.


Copyright (c) 2018 Canadian Social Science

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

Reminder

  • How to do online submission to another Journal?
  • If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

Submission Guidelines for Canadian Social Science

We are currently accepting submissions via email only. The registration and online submission functions have been disabled.

Please send your manuscripts to [email protected]，or [email protected] for consideration. We look forward to receiving your work.

 Articles published in Canadian Social Science are licensed under Creative Commons Attribution 4.0 (CC-BY).

 

Canadian Social Science Editorial Office

Address: 1020 Bouvier Street, Suite 400, Quebec City, Quebec, G2K 0K9, Canada.
Telephone: 1-514-558 6138 
Website: Http://www.cscanada.net; Http://www.cscanada.org 
E-mail:[email protected]; [email protected]

Copyright © Canadian Academy of Oriental and Occidental Culture