FINANCIAL INTERMEDIATION AND INCOME INEQUALITY IN NIGERIA: A COINTEGRATION APPROACH
Abstract
The relevance of finance in solving several economic problems has been emphasized with several empirical literature. However, the practicability of some of these results remains tough in developing countries due to their peculiar features. This study explores financial intermediation influence on income inequality in Nigeria between 1985 and 2020 using secondary data gleaned from the Central Bank of Nigeria Statistical Bulletin. The result of the Fully Modified Least Square (FMOLS) showed that changes in financial intermediation measures such as money supply and credit to private sector will result into an increase in income inequality while changes in stock market capitalization result in a decline in income inequality. The outcome of this study implies that using institutions-based approach to address the problem of income inequality in Nigeria may not yield desirable outcome as only stock market capitalization yields a statistically significant result at 95% confidence level. Hence, the study recommends that there is a need to design a modern financial market and institutions-based approach devoid of any personal colouration for the country in order to tackle the menace of income inequality. Likewise, there is a need to inculcate international best practices on socio-economic management in order to attain desired economic growth and sustainable development in Nigeria.
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Published in AFRICAN JOURNAL OF MANAGEMENT, BUSINESS ADMINISTRATION & ENTREPRENEURSHIP
ISSN: 2805 - 4237
This article appears in our peer-reviewed academic journal
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