Modelling financial openness growth-nexus in Nigeria : evidence from bounds testing to cointegration approach

Financial liberalization is theoretically known to be an important driver of economic growth; the emergence of new industries, the availability of money in the circulation and how it affects prices, extent of international trade in the countries among others are necessities that any economy cannot survive without. This paper examines the impact of financial liberalization on economic growth in Nigeria for the period of 1981-2013 using the autoregressive distributed lag bounds testing approach. The findings of this study reveal strong relationship between the indicators of financial liberalization and economic growth in Nigeria. We find that very high levels of financial openness generally erode the growth-promoting role of financial development. From the policy perspective, there is an ardent need to stabilize the performance of financial system in Nigeria.