Interaction Between Real And Financial Sectors In Nigeria: A Causality Test

Anthony Olugbenga Adaramola, Owoeye Taiwo


This study investigates the interrelationship between industrial productivity and money supply as proxies for the real and financial sectors by testing for causality under a Vector Auto-Regression (VAR) structure. In the study, it was revealed that Nigeria over the 35-year period between 1970 and 2005 like many other LDC's has a unidirectional causality running from the financial sector to the real sector growth. This indicates that the country still operates in the short-run and to take advantage of long-run changes, such variables as technology and factor productivity should to be taken into cognizance.

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ISSN (Paper)2222-1700 ISSN (Online)2222-2855

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