Version 1
: Received: 4 July 2018 / Approved: 5 July 2018 / Online: 5 July 2018 (08:39:38 CEST)
How to cite:
Oro, O.U.; Alagidede, P. Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria. Preprints2018, 2018070087. https://doi.org/10.20944/preprints201807.0087.v1
Oro, O.U.; Alagidede, P. Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria. Preprints 2018, 2018070087. https://doi.org/10.20944/preprints201807.0087.v1
Oro, O.U.; Alagidede, P. Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria. Preprints2018, 2018070087. https://doi.org/10.20944/preprints201807.0087.v1
APA Style
Oro, O.U., & Alagidede, P. (2018). Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria. Preprints. https://doi.org/10.20944/preprints201807.0087.v1
Chicago/Turabian Style
Oro, O.U. and Paul Alagidede. 2018 "Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria" Preprints. https://doi.org/10.20944/preprints201807.0087.v1
Abstract
The relationship between economic growth, growth volatility and financial sector development continues to attract attention in the theoretical and empirical literature. Over time, some studies hypothesize that finance has a causal linear relationship with growth. Recently several other authors contradict this claim and argue that the relationship that exists between finance and growth is nonlinear. We investigate these claims for Nigeria for the period between 1970 and 2015, using semi-parametric econometric methods, Hansen sample splitting techniques and threshold estimator. We observed no evidence of ‘Too much finance’ as claimed by many researchers in recent times. We show that the relationship between financial development and economic growth is U-shaped. This is equally true for the relationship between financial development and growth volatility. We also discuss policy implications of our findings and recommend financial innovations and decentralization of stock exchanges to boost access to financial services, in addition, improved regulation to enhance financial market efficiency.
Keywords
Nigeria; financial development; economic growth; threshold regression; time series
Subject
Business, Economics and Management, Economics
Copyright:
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
