Financial Development and Socioeconomic Outcomes in Nigeria: An Auto-Regressive Distributive Lag Approach

This research looked at the link between financial development and Nigeria's socioeconomic outcomes from 1990 and 2022. The World Bank's World Development Indicators and the Central Bank of Nigeria's Statistical Bulletin provided the data. The poverty rate is used to measure socioeconomic results, whereas stock market capitalization, credit to private sector, interest rate spread, broad money supply, and financial deepening are used as proxies for financial development. The individual series were tested for unit roots using the Augmented Dickey Fuller method. The diagnostics created mixed orders of I(0) and I(1) integrations, therefore the Auto-Regressive Distributive lag bound was used. Financial development and socioeconomic results do not have a long-term link, according to the analysis of the model's bound test result. Further regression results showed that financial deepening and stock market capitalization had a negative but significant connection with poverty. Broad money supply, on the other hand, has a negative and negligible impact on poverty rate in the current and previous year periods. The relationship between credit to the private sector, interest rate spread, and poverty rate, however, indicated positive and significant relationship both in the previous and second year period. Thus, it was shown that Nigerian socioeconomic results were significantly influenced by financial development. Therefore, it was suggested, among other things, that the federal government takes into account enacting progressive tax changes in order to more fairly divide wealth and finance social welfare initiatives meant to reduce poverty.