Financial Development, Judicial Corruption, and Economic Growth: Evidence From Nigeria

This paper assesses the impact of financial development, institutions, and judicial corruption, on economic growth as well as causality among the variables in Nigeria over the period of 1980 to 2016 using Autoregressive Distributed Lag (ARDL) Model and Granger Causality Test. The former takes care of both long-run and short-run dynamic effects of financial development, institutions, and judicial corruption as they affect economic growth while the latter captures the flow of causality among the variables. The ARDL Bound test result reveals existence of cointegration among the variables. The short-run result shows that judicial corruption is negatively and significantly related to economic growth while in the long-run, a positive but insignificant relationship exists. It also reveals that exchange institutions have significant negative relationship with economic growth. However, the results of Granger causality test showed that there is unidirectional causality running from judicial corruption to economic growth. In all, the study concludes that justice delayed is growth denied. The study therefore recommends that the institution of justice be reformed, civil litigations be discharged on time and judicial independence be restored accordingly. Keywords: financial development, Institutions, Judicial Corruption, Economic Growth, ARDL, Granger-Causality.