The Impact of Inflation on Financial Sector Development: Evidence from Nigeria
This paper examines the Impact of inflation on financial sector development in Nigeria using quarterly data from 2002 2017. Financial sector development is proxied using money supply as a share of GDP (M2/GDP).The AutoRegressive Distributive lag (ARDL) model is employed to carry out the estimation given the weakness of the Engle Granger residual based cointegration technique to test the long run and short run effects of the impacts of inflation on financial sector development. The results of the estimation reveal that there is a positive and statistically significant relationship between inflation and financial sector development in Nigeria. There is need to test for threshold effects of inflation on financial development in Nigeria. JEL Classification: C32; E31; O16