The study investigated the effect of selected macroeconomic variables on the financial sector of Nigeria from 1986 to 2018. The study employed monetary target variables, namely money supply, interest rate, inflation rate, exchange rate and credit to private sector as proxies for macroeconomic variables while the outputs from financial sector on as dependent variable. The data obtained from the Central Bank of Nigeria Statistical Bulletin, were tested subjected to Augmented Dickey-Fuller (ADF) test of stationarity, descriptive statistics, and Autoregressive Distributive Lag (ARDL). The results revealed that macroeconomic variables has 99% significant short run effect but no significant long run effects on financial sector output in Nigeria. Specific findings revealed that money Supply (M2) and Exchange Rate (EXR) have significant positive relationships with growth of the financial sector at current and third lags, respectively; but inflation rate has a significant negative effect on financial sector output in the current period, while Interest rate (INT) and Credit to Private Sector had no significant effect on financial sector output within the short run periods in Nigeria. It thus recommended that the government employ inflation stabilisation policies and encourage export, and close borders to import on financial services into Nigeria.
Macroeconomic variables, financial sector, money supply, inflation rate, exchange rate, interest rate, credit to private sector, Nigeria
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