(PhD) Department of Finance and Banking, Faculty of Management Sciences, University of Port Harcourt, Port Harcourt, Rivers State, Nigeria
The study examines the short-run and long-run interrelationships in addition to the direction of causality between financial inclusion, deepening, dualism, and real growth rate in Nigeria. The Augmented Dickey Fuller (ADF) and Phillips-Peron (PP) Tests; Johansen's Co-integration test; Error Correction model and Standard Pair-Wise Granger Causality Test were employed on time series data spanning the period 1981 - 2015 on the study variables of financial inclusion, financial deepening, financial dualism proxies by growth rate of informal financial sector, and real interest rate as reported in the Central Bank of Nigeria Statistical Bulletin. Results revealed an empirical evidence of long-run Co-integration but prevalence of no causality between the study variables. The study concludes that even if most of the changes in real GDP growth is attributed to adjustments in the permanent components, the dynamic impact of study variables (except real interest rate) on gross domestic product growth rate does not hold in short run. However, by the study variables can explain Nigeria's long-run growth rate of gross domestic product. Specifically, ECM suggests about 70 percent of the disequilibrium in the growth of Nigeria's gross domestic product is duly offset annually by long-run adjustments in financial inclusiveness, financial deepening scale, growth rate of informal sector and real interest rate of the economy. In view of the above, sound monetary and fiscal policies especially as it relates to financial deepening and inclusiveness and ample actions towards integrating the dual financial system is recommended to enhance growth and development.
Financial Inclusion, Deepening, Dualism, Innovation and Economic Growth
