FINANCIAL SECTOR DEVELOPMENT AND POVERTY REDUCTION IN NIGERIA: A VECTOR AUTOREGRESSION ANALYSIS (1980-2010)
Journal Title: Asian Economic and Financial Review - Year 2014, Vol 4, Issue 8
Abstract
This study examines the nexus between financial sector development and poverty reduction in Nigeria using Vector autoregressive (VAR) model. The choice of the study has been motivated by the alleged failure of the financial sector development in bringing about a reduction in the worsening trend in poverty incidence in Nigeria. The evidences from both the VAR and impulse response show that the indirect effect of economic growth exerts the strongest influence on poverty reduction in the short run but could be detrimental to the poor in the long run due to the adverse effect of income inequality. Furthermore, the relationship between poverty and the financial deepening proxied by broad money supply (M2) is negative and significant. Hence, the McKinnon conduit effect is the likely main transmission channel through which the poor benefit from the financial sector development in the long run. The study, however, concludes that credits to private sector, contrary to the general belief, have failed to cause a reduction in the incidence of poverty in Nigeria.
Authors and Affiliations
Risikat Oladoyin S. Dauda| Department of Economics University of Lagos, Akoka, Lagos, Kayode O. Makinde| Department of Economics University of Lagos, Akoka, Lagos
Keywords
Related Articles
- EP ID EP2063
- DOI -
- Views 424
- Downloads 26
MAINTAINING ORDER IN THE MICROFINANCE SECTOR IN GHANA
This study examines the processes of maintaining order in the microfinance sector, particularly, the processes of resolving disputes, the types and causes of disputes that arise between microfinance institutions, their c...
HAS ECONOMICS LOST ITS OWN IDENTITY?
Dealing with economic science from the methodological point of view represents an unusual challenge. Primarily owing to the fact that there is a whole spectrum of opinions on how economics is supposed to be studied. Besi...
EFFECT OF DISAGREEMENT ON CORPORATE FINANCING POLICY AND INVESTMENT LEVEL
This study models firm?s financing policy and investment level when manager and outside investors has disagreement. It shows that the firm is more likely to over invest when the level of disagreement is high, and prefers...
THE TESTING OF HALL’S PERMANENT INCOME HYPOTHESIS: A CASE STUDY OF PAKISTAN
The objective of this study is to test the Hall’s permanent income hypothesis for Pakistan using annual data from 1992 to 2010. The basic model of permanent income hypothesis (PIH) showed the validity of absolute income...
MODERATING EFFECT OF INTERNAL CONTROL SYSTEM ON THE RELATIONSHIP BETWEEN GOVERNMENT REVENUE AND EXPENDITURE
The study aims at examining the moderating effect of internal control system on the relationship between government revenue (statutory allocation and internally generated revenue) and expenditure. All the sixteen (16) lo...