Asymmetric effect of financial development and globalisation on economic growth in Nigeria

Purpose Financial development and globalisation are performing important roles across the economies in the world. However, the increase and decrease in financial development and globalisation may have different impacts on economic growth contrary to the assumption of an intrinsic monotonic relationship. This study therefore investigates the asymmetric effect of financial development and globalisation on economic growth in Nigeria during the period from 1980 to 2023. Design/methodology/approach The study employed non-autoregressive distributed lag (NARDL) for the estimation of the results while the Wald test is used to determine the existence of an asymmetric relationship both in the short run and long run. Findings The Wald test shows that the relationship between financial development and economic growth in Nigeria is asymmetric both in the long run and short run. Similarly, long-run and short-run asymmetric relationship between globalisation and economic growth is also confirmed by the Wald test. The NARDL results show that financial development increase is beneficial to economic growth while financial development decrease is harmful to economic growth in the short run and long run. The study also found that globalisation increase stimulates economic growth both in the short run while both the increase and decrease in globalisation reduce economic growth in the long run. Originality/value This study adds to the existing literature by determining the effect of the increase and the decrease in financial development and globalisation on Nigeria’s economy.