Relative potency of financial repression and liberalization on financial development and economic growth: An empirical survey

Abstract

This paper assessed the relative potency of financial repression and liberalization in Nigeria. The relative effect of financial development on economic growth during these two policy periods was considered using multiple regression analysis which was tested and proved not to be spurious. Furthermore, the paired comparison test was employed to determine whether financial liberalization causes observed improvement in the growth of the economy. The results reveal that financial development during the period of financial liberalization significantly impact more on the growth variable (GDP). Also, the paired comparison test shows that financial liberalization causes observed improvement in the growth of the economy and the well measured financial development. The banking system however is noted to be bedecked with crisis. The researcher therefore recommends that putting in place financial superstructure should precede the adoption of financial liberalization in order to reap the best thereof.