Financial Intermediation–Economic Growth Nexus: Empirical Evidence from Nigeria

This study examined the effect of financial intermediation on economic growth in Nigeria from 1985 to 2024. Autoregressive Distributed Lag (ARDL)/Bound testing to co-integration was used to establish the short run and long-run dynamic. The study revealed a high speed of adjustment in the short run (Cointeq(-1) = (-0.3647) for the model. Similarly, the study revealed that in the long run, credit to private sector/GDP (β1 = 4305.9) and Oil rents (β6 = 2434.9, p = 0.4339) all established positively insignificant effect on economic growth in Nigeria at 5% significance level while inflation (β3 = -456.84, p = 0.5508) and political instability (β7 = -37828.2, p = 0.4256) all established negative but insignificant effect on economic growth. at 5% significance level. The study, therefore, recommends that the Central Bank of Nigeria (CBN) should shift policy focus from the quantity to the quality and direction of private credit; enhance the inclusive and productive nature of financial depth as well as strictly adhere to limits on ways and means financing to prevent inflationary, growth-eroding money supply expansion.