Financial Integration and Performance of the Nigerian Economy

Abstract

In this study, the impact of financial integration on Nigeria's economic development from 1991 and 2021 was examined. In this study, the dependent variable was real gross domestic product, while the independent variables were trade openness, financial deepening, foreign remittances, foreign direct investment inflow, and foreign portfolio investment inflow. Five hypotheses and five research questions were developed. We evaluated pertinent conceptual, theoretical, and empirical literatures. The longitudinal research design was used in the study. These factors' data are from the World Bank Development Indicators 2021 and the Central Bank of Nigeria Statistical Bulletin, 2021. Descriptive statistics, Augmented Dickey Fuller unit root test, Johansen Cointegration Test and Auto Regressive Lag Distribution Test were employed in analyzing the data. The analysis was done with the aid of E-views version 9.0. The study found that Foreign direct investment inflow has a positive and insignificant effect on economic growth in Nigeria. Foreign portfolio investment inflow has a positive and significant effect on economic growth in Nigeria. Trade openness has a positive and insignificant effect on economic growth in Nigeria. Financial deepening has a positive and significant effect on economic growth in Nigeria. Foreign remittances have a positive and significant effect on economic growth in Nigeria. The study therefore concludes that financial integration has significant positive impact on economic growth in Nigeria and thus recommended amongst others that government needs to put in place befitting macroeconomic policies and institutions that will enable the economy to reap the benefits of financial integration in order to sustain economic growth and development.