FINANCIAL REFORMS AND SUSTAINABLE DEVELOPMENT IN NIGERIA
DOI:
https://doi.org/10.63725/jarat.v1.i1.06Keywords:
Financial Reforms, Sustainable Development, Market Capitalization, Per capita IncomeAbstract
One of the goals of monetary policy and reforms is the achievement of sustainable development. The extent to which various financial reform policies have contributed to the achievement of sustainable development goals in Nigeria is a subject of discuss among scholars and researchers. This study therefore examined the effect of financial reforms on sustainable development in Nigeria from 1995 to 2023.
The study used econometric techniques including descriptive statistics, correlation analysis, ADF stationarity test and ARDL Bound long-run relationship test as well as the ARDL short and long run forms to examined the short-run and long-run effects of key financial variables—Credit to the Private Sector (CPS), Exchange Rate (EXR), Monetary Policy Rate (MPR), and Stock Market Capitalization (SMC)—on per capita income.
Findings from the study reveal a significant short-run impact of the exchange rate on per capita income. Specifically, the coefficient for EXR is negative and statistically significant (-4.63, p = 0.0104), indicating that exchange rate depreciation adversely affects per capita income in the short run. However, the short-run effects of CPS, MPR, and SMC on per capita income are found to be statistically insignificant, suggesting that these financial variables do not exert an immediate influence on economic well-being. In the long run, the relationship between per capita income and the selected financial variables weakens further. The estimated coefficients for CPS, EXR, MPR, and SMC are all statistically insignificant, implying that these financial factors do not have a strong or persistent influence on per capita income over time. This result suggests that while short-term fluctuations in exchange rates can impact economic welfare, financial indicators such as credit expansion, monetary policy stance, and stock market size may not play a crucial role in shaping long-term income levels.
Based on these findings, the study recommended that policymakers should implement financial regulations that incentivize banks and financial institutions, financial sector reforms should be accompanied by strong regulatory oversight to ensure that credit expansion supports productive and sustainable investments and the CBN should implement policies that promote exchange rate stability.
