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Title: Bound Testing Approach For Cointergration And Causality Between Financial Development, International Trade And Economic Growth In Nigeria
Authors: Bello Abubakar MUHAMMAD; Shehu Mohammed ABDULLAHI; Aliyu DALHA
Year: 2019
Publication No: M-JOSTEVE-2019-58
DOI:
Total downloads: 521
Issue: Volume 7, Number 1
File size: 575 Kb
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Abstract
The objective of the paper is to investigate the causal link or direction of causality and the possibility of long-run equilibrium relationship between Financial Development, International Trade and Economic Growth in Nigeria viz; money supply, domestic credit, import, export and economic growth using annual data covering a period of 1986-2017. The Results of the ARDL bounds test for cointegration reveal that a long-run equilibrium relationship was confirmed between Financial Development, International Trade and Economic Growth in Nigeria. The result of the granger causality test shows that money supply granger caused GDP. Similarly, GDP granger cause export. So also, import granger cause GDP. Likewise, GDP granger cause domestic credit. Also, money supply granger cause export. Moreover, domestic credit granger cause export and export granger cause domestic credit, implying that there is bi-directional relationship flowing from domestic credit to export and vice versa. The estimated coefficient value of (-0.433850) suggests that the reversion to long run equilibrium is at an adjustment speed of 43.4 per cent speed of adjustment in a year which can be considered an average speed of adjustment of economy. It is recommended that government and the policy makers should formulate policies that will accelerate economic growth through a healthy financial system and international trade.

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