FINANCIAL DEEPENING AND GROSS NATIONAL SAVINGS: EVIDENCE FROM NIGERIA EMERGING FINANCIAL MARKET
Dr. Ebi R. Odi and Dr. Greatness U. Oji
Department of Finance and Banking
University of Port Harcourt, Rivers State, Nigeria
ABSTRACT
This study examined the effect of financial deepening on gross national savings in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical bulletin and publications of Nigeria Bureau of Statistics from 1987-2020. Gross national saving was modeled as the function of Private sector credit, Broad money supply, Capital market development, financial market openness, Number of commercial bank branches and money market development. Ordinary least square methods of cointegration, granger causality test, unit root test and Vector error correction model. The study found that 97 percent of variation on gross national savings can be traced to variation in financial sector deepening. The estimated model found that financial market openness and number of commercial banks branches have negative effect on gross national savings. The study also found that capital market development, money market development, money supply and credit to private sector have positive effect on Nigeria gross national savings. The Augmented Dickey Fuller test, proved that variables were co-integrated of order I(1) and as such, deemed fit for employment in subsequent econometric estimations. From the findings, the study concludes that financial deepening has significant effect on Nigeria gross national savings. We recommend that Policies should be advanced to enhance the operational efficiency of the financial market and there should be full deregulation of the money market rate to enable investors in the financial market have equitable return on investment and Central Bank of Nigeria should ensure increase in the operational efficiency of the banking sector such as the re-introduction of the rural banking scheme to enhance deposit mobilization from the rural areas.
Keywords: Financial Deepening, Gross National Savings, Emerging Financial Market
Odi, E.R & Oji, G.U (2020). Financial Deepening and Gross National Savings: Evidence from Nigeria Emerging Financial Market. International Journal of Advanced Academic Research, 6(12), 160-177. Available online at: https://www.ijaar.org/articles/v6n12/sms/ijaar-sms-v6n12-Dec20-p6128202.pdf
