Financial Sector Development and Economic Growth: An Empirical Investigation of the Nigerian Economy (2020 - 2024)

This study examines an empirical investigation of financial sector development and economic growth of the Nigerian economy for the period 2020 – 2024. The research follows a quantitative design, which is appropriate for investigating the causal relationship between financial sector development and economic growth. The population for this study is the Nigerian economy, particularly the financial sector, which includes banks, capital markets, microfinance institutions, and other financial intermediaries. The sample consists of data from the Nigerian financial sector over the period 2020 to 2024. The data includes financial indicators such as credit to the private sector, the extent of financial inclusion, capital market development, and other relevant metrics, alongside macroeconomic indicators like GDP, inflation rates, and exchange rates. The data collected was analyzed using statistical techniques such as regression analysis, correlation analysis, and time-series analysis. From the analysis of data, it is evident that there exists a moderately strong, positive relationship between certain financial sector variables particularly credit to the private sector and capital market development and economic growth, measured through GDP fluctuations over the observed period. The study’s correlation matrix and multiple regression analysis confirmed that increases in private-sector credit and the size of the capital market significantly explained variations in GDP growth, with statistical significance maintained even after controlling for inflation, exchange rate volatility, and fiscal policy changes. However, financial inclusion as proxied by bank account ownership and digital payment penetration showed a less robust relationship with GDP, perhaps due to a time lag between inclusion efforts and measurable economic returns. Building on the empirical insights gained in this study, it is crucial for financial sector stakeholders particularly regulatory agencies, financial institutions, and policy designers—to adopt a multi-tiered and evidence-driven strategy to reinforce the financial sector’s contribution to economic growth.