FINANCIAL GLOBALIZATION AND FINANCIAL SECTOR DEVELOPMENT IN NIGERIA
Keywords:
Capital Market, Financial Development, Financial Globalisation, Money Market, Nigeria
Abstract
Financial globalisation requires serious consideration in an effort to stimulate financial development of any economy. Despite the governmental measures to improve financial globalisation, the sector still experiences low level of development in Nigeria. This study investigated the impact of financial globalization on financial sector development in Nigeria. Ex-post facto design was employed and annual data were obtained from the World Bank's Development Indicators and Global Financial Development Database from 1981 to 2023. Autoregressive distributed lag (ARDL) method was used for data analysis. Financial globalisation index was found to have had positive effect on money market development both in the short-run (=0.153; p<0.01) and long run(=0.349;p<0.01). A positive effect was also reported for capital market development, but only in the long run (=6.217; p<0.01). The study concluded that financial globalization levels are low in Nigeria and there has been little improvement in its levels over the period. The study recommended that the Nigerian authority should direct policy attention to promoting increased globalization of the financial sector through further deregulation of its activities and removal of restrictions on actors in this sector.
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References
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Nwokoye, E. S., Oyim, A., Dimnwobi, S. K. & Ekesiobi, C. (2019). Socioeconomic determinants of information and communication technology adoption among rice farmers in Ebonyi State, Nigeria. Nigeria Journal of Economics and Social Studies, 61(3): 1-20
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Nwokoye, E. S., Igbanugo, C. I., Ekesiobi, C. S. & Dimnwobi, S. K. (2022) Fiscal incentives and
tax compliance behaviour in industrial clusters: a survey of clusters in South-East Nigeria. Journal of Africa
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Omojolaibi, J. A, Mesagan, E. P. & Stanley, N. C. (2016). Globalization and financial development in Nigeria. Iranian Economic Review, 20 (4), 461 - 478.
Pesaran, M. H., Shin, Y. & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.
Pesaran, M. H. & Shin, Y. (1999). An autoregressive distributed lag modelling approach to cointegration analysis. In Econometrics and Economic Theory in the 20h Century: The Ragnar Frisch Centennial Symposium. Edited by Steinar Strom. Cambridge: Cambrifge University press.
Popoola, J. (2020). Globalization and Nigeria’s Economic Development—A Study of the Interconnectedness. Open Journal of Political Science, 10 (2) 460 - 480
Rathore, H. S. & Prajapati, R. (2019). The impact of financial globalization on Indian financial market: A case study of regional rural bank. Available at SSRN 3389130.
Tovar-García, E. D. (2012). Financial globalization and financial development in transition countries. Economía: teoría y práctica, (36), 155-178.
Andreasena, E., & Valenzuela, P. (2016). Financial openness, domestic financial development and credit ratings. Finance research letters, 14(7), 1-8.
Asongu, S., Koomson, I., & Tchamyou, V. (2017). Financial globalisation uncertainty/instability is good for financial development. Research in international business and finance, 41(C), 280-291.
Asratie, T. M. (2021). Determinants of financial development in Ethiopia: ARDL approach. Cogent economics and finance, 9, 1-15.
Awoyemi, B. O. & Jabar, A. A (2019). Financial globalization: Economic implications for Nigeria. Journal of humanities and social sciences (IOSR-JHSS) 19 (4), 113-117
Balcilar, M., Gungor, H., & Olasehinde-Williams, G. (2019). On the impact of globalization on financial development: A multi-country panel study. European journal of sustainable development, 8(1), 350-364.
Batuo, M., Mlambo, K., & Asongu, S. (2018). Linkages between financial development, financial instability, financial liberalization and economic growth in Africa. Research in international business and finance, 45, 168-179.
Basco, S. (2014). Globalization and financial development: A model of the dot-com and the housing bubbles. Journal of international economics, 92, 78–94.
Broner, F. A. & Ventura, J. (2010). Rethinking the effects of financial liberalization, no. w16640. National Bureau of Economic Research.
Chekwube, M. E. & Asongu, S. (2022). Financial development and renewable energy consumption in Nigeria. A G D I Working Paper, 1-28.
Chinn, M. D., & Ito, H. (2006). What matters for financial development? Capital controls, institutions and interactions. Journal of development economics, 81(1), 163-192.
Chong, A. & Calderon, C. (2000). Institutional quality and income distribution. Economic Development and Cultural Change, 48(4), 761-786.
De Nicolo, G. & Juvenal, L. (2014). Financial integration, globalization and real activity
Dimnwobi, S. K., Madichie, C. V., Ekesiobi. C. & Asongu, S. A. (2022). Financial development and renewable energy consumption in Nigeria. A G D I Working Paper, 1- 29.
Ezejiofor, R. A., Peace, N. N. & Okoye, J. F. (2015). Globalization and development of banking system in Nigeria. International Journal of innovative and applied research, 3(12), 83-91.
Edgar, D. T. (2015). Financial globalization and financial development in transition countries
Falahaty, M., & Law, S. H. (2012). The effect of globalization on financial development in the MENA region. Transition Studies Review, 19(2), 205–223.
Garcia, E. D. T. (2012). Financial globalization and financial development in transition countries. Economia Teoria Y Practica Nueva Epoca, 36, 155-178.
Goldsmith, R. (1969). Financial structure and development. New Haven: Yale University Press.
Kalemli-Ozcan, S., Srensen, B. E. & Yosha, O. (2003). Risk sharing and industrial specialization: Regional and international evidence. American Economic Review 93, 903– 918.
Kandil, M., Shahbaz, M. & Nasreen, S. (2015). The interaction between globalization and financial development: New evidence from panel cointegration and causality analysis. Empirical Economics, 49(4), 1317–1339.
Kazar, A. & Kazar, G. (2016). Globalization, financial development and economic growth. International journal of economics and financial issues, 6(2), 578-587.
Kose, M., Law, S. H., Lim, T. C. & Ismail, N. W. (2013). Institutions and economic development. A granger causality analysis of panel data evidence. Economic Systems, 37, 610-624.
Lane, P. R. & Milesi-Ferretti, G. M. (2007). The external wealth of nations mark II: Revised and extended estimates of foreign assets and liabilities, 1970–2004. Journal of international economics, 73, 223-250.
Law, S. H. & Azman-Saini, W. N. W. (2012). Institutional quality, governance and financial development. Economics of governance, 13(3), 217-236.
Law, S. H., Azman-Saini, W. N. W. & Ibrahim, M. H. (2013). Institutional quality thresholds and the finance –growth nexus. Journal of Banking & Finance, 37(12), 5373–538.
Law, S. H., Azman‐Saini, W. N. W. & Tan, H. B. (2014). Globalization, institutional reforms and financial development in East Asian economies. The World Economy, 38(2), 379-398.
Mekuanent, T. (2022). Does financial globalization contribute to financial development in
developing countries? Evidence from Africa. https://doi.org/10.1016/j.heliyon.2022.e10974
Mnif, A. T. (2016). Does financial liberalization negatively affect emerging stock market stability? High School of Commerce of SFAX, University of Tunis, 1-8.
Muye, I. M., & Muye, I. Y. (2017). Testing for causality among globalization, institution and financial development: Further evidence from three economic blocs. Borsa Istanbul Review, 17(2), 117–132.
Mendoza, E. G., Quadrini, V. & Ríos-Rull, J. V. (2007). On the welfare implications of financial globalization without financial development (No. w13412). National Bureau of Economic Research.
Nasreen, S. & Pervez, P. (2017). Financial development, financial liberalisation and institutions nexus in selected sample of middle-income countries.
Nwokoye, E. S., Oyim, A., Dimnwobi, S. K. & Ekesiobi, C. (2019). Socioeconomic determinants of information and communication technology adoption among rice farmers in Ebonyi State, Nigeria. Nigeria Journal of Economics and Social Studies, 61(3): 1-20
Nwokoye, E. S., Igbanugo, C. I. & Dimnwobi, S. K. (2020) International migrant remittances and labour
force participation in Nigeria. African Development Review, 32(2): 125-137. https://doi.org/10.1111/1467-
8268.12421
Nwokoye, E. S., Igbanugo, C. I., Ekesiobi, C. S. & Dimnwobi, S. K. (2022) Fiscal incentives and
tax compliance behaviour in industrial clusters: a survey of clusters in South-East Nigeria. Journal of Africa
Business, 1-20. https://doi.org/10.1080/15228916.2022.2031827
Omojolaibi, J. A, Mesagan, E. P. & Stanley, N. C. (2016). Globalization and financial development in Nigeria. Iranian Economic Review, 20 (4), 461 - 478.
Pesaran, M. H., Shin, Y. & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326.
Pesaran, M. H. & Shin, Y. (1999). An autoregressive distributed lag modelling approach to cointegration analysis. In Econometrics and Economic Theory in the 20h Century: The Ragnar Frisch Centennial Symposium. Edited by Steinar Strom. Cambridge: Cambrifge University press.
Popoola, J. (2020). Globalization and Nigeria’s Economic Development—A Study of the Interconnectedness. Open Journal of Political Science, 10 (2) 460 - 480
Rathore, H. S. & Prajapati, R. (2019). The impact of financial globalization on Indian financial market: A case study of regional rural bank. Available at SSRN 3389130.
Tovar-García, E. D. (2012). Financial globalization and financial development in transition countries. Economía: teoría y práctica, (36), 155-178.
Published
2025-10-31
How to Cite
Gbadebo, A. (2025). FINANCIAL GLOBALIZATION AND FINANCIAL SECTOR DEVELOPMENT IN NIGERIA. J-MACC : Journal of Management and Accounting, 8(2), 298-314. https://doi.org/https://doi.org/10.52166/j-macc.v8i2.11212
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Articles
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