European Journal of Accounting, Finance and Investment

Financial Innovation And Economic Growth Of Nigeria

Ebimobowei Appah

Isaac Jasper Boro College of Education, Sagbama, Bayelsa State

FELIX SEKEME TEBEPAH

ISAAC JASPER BORO COLLEGE OF EDUCATION, SAGBAMA, BAYELSA STATE, NIGERIA

Keywords: Financial Innovation, Economic Growth, Nigeria, Long and Short run relationship

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Abstract

The finance-growth literature advocates that financial innovation positively or negatively influences the level of growth. Hence, this study empirically investigated the impact of financial innovation on economic growth in Nigeria from 1981 to 2021. This research anchored on the task technology fit theory advanced by Goodhue and Thompson in 1995.The study used correlational research design and the sample size of data for the study was achieved through purposive sampling technique while secondary data were obtained from the Central Bank of Nigeria (CBN) statistical bulletin and National Bureau of Statistics (NBS). The data were analysed using univariate analysis (descriptive statistics, unit root test), bivariate analysis (correlation matrix) and multivariate analysis (autoregressive distributive lag and granger causality tests). The result from the ARDL suggested that broad money to narrow money (M2/M1) had both positive and significant association on gross domestic product per capital (GDPC), growth in banking sector credit to private sector (GBCCP was found to be negative and insignificant association on gross domestic product per capital (GDPC) trade openness (TOP) had both positive and significant association on gross domestic product per capital (GDPC), government expenditure (GEX) had negative and significant association on gross domestic product per capital (GDPC), gross fixed capital formation (GCF) had both positive and significant association on gross domestic product per capital (GDPC) and consumer price index (CPI) had negative and significant association on gross domestic product per capital (GDPC). The study on the basis of the result concluded that financial innovation influences the level of economic growth. Hence on the basis of the conclusion the study recommended amongst others that the regulatory authorities such as the Central Bank of Nigeria should combine and implement new financial assets, payments tools and services for properly designed growth and development of financial innovation models as stimulus for economic growth and development in Nigeria.