JEFMS Journal

ABSTRACT:

The study examined the relationship between financial deepening (FD) and entrepreneurial growth (EG) in Nigeria for the period of 1986-2021 (36years). This was done in respect to the measures of FD, namely; Ratio of Broad Money Supply to Gross Domestic Product (M2/GDP), Ratio of Private Sector Credit to Gross Domestic Product (PSC/GDP), Ratio of Market Capitalization to Gross Domestic Product (MCAP/GDP) and Ratio of Loans to Small and Medium Scale Enterprises to Gross Domestic Product (LSMSE/GDP) in relation to EG was proxied by Small and Medium Scale Enterprises Output (SMSEO) in Nigeria. The data for the study was sourced from Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank Development Indicators. Then, the stationary and normality tests was carried out, followed by the descriptive statistics, correlation and multiple regression tool of analysis with the aid of E-VIEW 9.0 statistical package. The results showed that M2/GDP, PSC/GDP, MCAP/GDP and LSMSE/GDP have positive and negative significant effect on SMSEO in Nigeria. Hence, the study indicated that FD had a considerable impact on EG in Nigeria. The report proposed that the CBN compel deposit money Banks (DMBs) to extend greater loan facilities to entrepreneurs (private sector), including young graduates and new entrepreneurs, without collateral to enable them to participate in successful businesses. In addition, venture capital firms should be developed to aid in EG, resulting in the production of value and wealth.

KEYWORDS:

Financial Deepening, Entrepreneurial Growth, Money Supply, Loans, and Small and medium Scale Enterprises

REFERENCES:

1) Akhator, A. P. & Marcus, G. O. (2018). Financial deepening and economic development of Nigeria: an empirical investigation. Veritas International Journal of Entrepreneurship Development, 1(1), 125-139.

2) Akinmulegun, S. O. & Akinde, J. A. (2019). Financial deepening and manufacturing sector performance in Nigeria (1981-2017). Journal of Economics and Finance, 10(4), 18-27

3) Balago, K. A. (2015). Determinants of unemployment in limpopo province in South Africa: Exploratory Studies. Journal of Emerging Trends in Economics and Management Sciences, 2(1), 54-61.

4) Bencivenga, V. and Smith, B. (1991). Financial intermediation and endogenous growth, The Review of Economic Studies, 58(23), 195-209.

5) Berthelemy J. C., A. Varoudakis (1996). Economic Growth, Convergence Clubs, and the Role of Financial Development. Oxford Economic Papers, Volume 48, Issue 2, April 1996, Pages 300 328, https://doi.org/10.1093/oxfordjournals.oep.a028570

6) Chami, R., Fullenkamp, C. and Sharma, S. (2019). A Framework for Financial Market Development, IMF Working Paper No. WP/09/156

7) Chiawa, M. A. & Abur, C. C. (2016). Financial Deepening and Economic Growth in Nigeria: Application of Cointegration and Causality Analysis. 3rd International Conference on Intelligent Computational System (ICIC’2013). April 29-30, Singapore.

8) Christian, L. N. (2017). Financial deepening dynamics and implication for financial policy coordination in a monetary union: The case of WAEMU. African Economic Conference2013 Johannesburg.

9) Demetriades, P., Hussein, K., (1996). Does financial development cause economic growth? time series evidence from sixteen countries, Journal of Development Economics, 51(2), 387--411.

10) Ehiedu, V.C., Olanye P. (2014). Mergers and acquisition as instrument of corporate survival and growth.European Journal of Business and Management. 6(8), 151-156. International Institute for Science, Technology &Education (IISTE).

11) Ehiedu, C. V., Odita, O. A. & Kifordu, A. A. (2020). Financial integration and growth volatility nexus: The Nigeria experience. Webology, 17(2), 404-415.

12) Ehiedu, V. C., Onuorah, A. C. & Mbagwu, O. N. (2022). Financial deepening and human capital development in Nigeria. Journal of Research in Business and Management, 10 (7), 28-36.

13) Ehiedu, V. C., Onuorah, A. C. & Okoh, E. (2021). Automated teller machine (ATM) penetration and financial inclusiveness in Nigeria: A tripod banking system approach. Indian Journal of Economics and Business, 20(3), 1093-1104.

14) Eke, Okoye and Evbuomwan(2020) Entrepreneurship and Financial Deepening in selected African Economies: Does Human Capital Development Matter? Innovation Management and Education Excellence through Vision 2020.

15) Fitzgerald, V. (2016) Financial development and economic growth: A critical view', Worldeconomicandsocialsurvey, [online]availablehttp://www.un.org/en/development/desa/policy/wess/wess_bg_papers/bp_wess_fitzgerald.

16) Goswami, M. and Sharma, S. (2017) The Development of Local Debt Markets in Asia, IMF Working Paper No. WP/11/132

17) Greenwood, J., & Jovanovic, B. (1990). Financial development, growth, and the distribution of income. Journal of Political Economy (5), 1076– 1107.

18) Gupta, K. L. (1984). Finance and Economic Growth in Developing Countries, London: Croom Helm.

19) Hammilton, O. I. and Godwin, O. (2017). Does financial deepening follow supply leading or demand following hypothesis? A Critical Look at the Nigerian Evidence. Journal of Science and Technology, 5, 10-15.

20) Igwe A, Edeh C.E, Ukpere WI (2016). Financial deepening and economic growth in Nigeria (1981-2012): a managerial economic perspective. Risk Governance & Control: Financial Markets & Institutions, 4(4), 121-131.

21) IMF (2017). World economic outlook report. Retrieved from world-economic-outlook findthedata.org/1/4135/Nigeria.

22) John, E. I., & Ibenta, S. N. (2017). Financial deepening and entrepreneurial growth in Nigeria. Research Journal of Finance and Accounting, 8(20), 40-51.

23) Kayode O. F., Ibenta, S. N. & Owoputi, J. A. (2020). Financial Deepening and Performance of Manufacturing Firms in Nigeria. IOSR Journal of Economics and Finance (IOSR-JEF), 11(1), 49-61.

24) Kiprop, J. G. (2016). The relationship between financial deepening and the growth of small and medium enterprises in Kenya,(Master’s Thesis, University of Nairobi, Kenya).

25) Ndekwu E.G. (2019). The Financial Systems Role in Resource Mobilization and investment: An Analysis of Financial Deepening in Nigeria's Financial Sector.

26) Nnanna, O. J. & Dogo, M. (2016), Structural Reform, Monetary Policy and Financial Deepening: The Nigerian Experience: Economic and Financial Review, Vol. 36 No. 2, June.Pp 1-29.

27) Nwajiaku E.O, Ananwude A.C and Obi-Nwosu V. (2020). Financial Deepening and Entrepreneurial Growth in Nigeria: A Time Series Analysis (1986 –2018). 257International Journal of Academic Research in Accounting, Finance and Management SciencesVol.10,No.2 pp. 257–263 HRMARSwww.hrmars.com

28) Nwakobi, P. C.,Oleka, D. C. and Ananwude, A. C. (2019). Effect of financial deepening on economic growth in Nigeria: A time series appraisal (1986-2018). Asian Journal of Advanced Research and Reports, 7(3), 1-9.

29) Nwakoby, C. I. N., & Ananwude, A. C. (2016). The role of non-bank financial institutions on financial intermediation process in Nigeria (1992-2014). British Journal of Economics, Management & Trade, 14(4), 1-15.

30) Nzotta, S. M. & Okereke, E. J. (2009). Financial Deepening and Economic Development in Nigeria: An Empirical Investigation. African Journal of Accounting, Economics, Finance and Banking Research, 5(5), 52-66.

31) Ohwofasa B.O. & Aiyedogbon J.O. (2017). Financial deepening and economic growth in Nigeria, 1986-2011: An empirical investigation. Journal of Economics and Development Studies, 1(1), 24-42.

32) Okere P. A, Njoku G.O &Nwosu E. (2020) Small and Medium Enterprises (SME’s) funding and deposit money banks in Nigeria. International Journal of Science and Management Studies (IJSMS) E-ISSN: 2581- 5946Volume: 3 Issue: 4 July to August www.ijsmsjournal.org.

33) Okere, A. P., Uzokwe, J. N. & Ekujereonye, U. B. (2021). Effect of financial deepening on entrepreneurial development in Nigeria. International Journal of Innovative Finance and Economics Research, 9(1), 60-70.

34) Olawumi, S. O., Lateef, L. A. & Olade, E. O. (2017). Financial Deepening and Bank Performance: A Case Study of Selected Commercial Banks in Nigeria. Journal of Mathematical Finance, 7, 519-535.

35) Onyemachi, C. (2016). An empirical analysis of financial deepening and economic growth (1986-2010). Ahmadu Bello University, Economics, Zaria.

36) Osinsanwo, B.G. (2017). The macroeconomic effect of financial development on economic growth in Nigeria: A long run analysis, 1970-2011. Journal of African Macroeconomic Review, 4, 227-245.

37) Ovat, O. O. (2017). Liquidity constraints and entrepreneurial financing in Nigeria: The fate of fresh graduate entrepreneurs. Global Journal of Management and Business Research Finance, 13(9), 35-42.

38) Paramaditha A. (2017). Analysis: The importance of financial deepening in Indonesia; Available: https://www.thejakartapost.com/new/02/18/analysis-the-importance-financial-deepeningindonesia.htm

39) Sackey, F.G. & Nkrumah, E.M. (2017). Financial sector deepening and economic growth in Ghana. Journal of Economics and Sustainable Development.3 (8), Pp. 122-140.

40) Schumpeter, J.A. (1911). The Theory of Economic Development; Harvard University Press: Cambridge, MA, USA.

41) Shaw, E. S. (1973). Financial Deepening in Economic Development, New York: Oxford University Press.

42) Wairagu, R. (2016). Effects of Ffinancial Deepening on the Entrepreneural Growth in Kenya: A Case Study of SMEs within Nairobi County. A Master’s Degree Thesis submitted to the School of Business, University of Nairobi.