Financial Innovation and Economic Growth in Nigeria a Sectoral Analysis

Ogunsakin Sanya, Alabi Bakare Olatunji


This study examined the effect of financial innovation on different components of real output of some selected sectors of Nigerian economy between 1990 to 2018 using panel vector Error Correction as estimation technique.  Data for the study were sourced from Central Bank of Nigeria statistical Bulletin and Bureau of Statistics.  Results obtained from our various estimations showed that there is long-run co-movement between sectoral real output and financial innovation variables. Result from VAR revealed that sectoral output responded heterogeneously to shocks emanating from financial innovation.  Take for instance, the responses of manufacturing and Agricultural sectors to shocks from financial innovation variables were positive and significance while responses of service and construction sectors were positive but insignificant.  Results obtained from variance decomposition showed that the most essential financial innovation variables which have much influenced on sectoral output in Nigeria during the study period are Automated teller machine ATM) and point of sale transaction (POS).  Based on these findings, the study therefore, concludes that financial innovation has effects but not a significant effect on sectoral real output in Nigeria.  The study recommends that more regulatory guide-lines should be formulated for financial institutions to perform their financial intermediation functions effectively.

Keywords: Financial innovation, sectoral real output, VECM and Nigeria

DOI: 10.7176/JESD/11-16-14

Publication date:August 31st 2020

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