Interactive Effects of Financial Development and Infrastructure on Sustainable Economic Growth in Nigeria

Abstract

Sustainable economic growth continues to be the major issue of concern confronting the Nigerian economy, with challenges that pertain to financial inclusion, intermediation, and infrastructure development. This study investigates how financial development and infrastructure development interact to influence sustainable economic growth for the period 1986 to 2024. The data for the analyses were sourced from Central Bank of Nigeria (CBN) and World Bank. A Vector Error Correction Model (VECM) was adopted for empirical investigation of short and long run relationships. The findings indicate that financial development does have a positive effect on sustainable growth, while financial infrastructure has an insignificant negative impact. Also, the interaction effect between financial development and infrastructure were estimated to have a significant effect on growth. Similarly, the moderation effects of financial deepening and Fintech also have a significant effect. The study suggests the need for Nigeria to focus first on financial systems and infrastructure in order to achieve inclusive and sustainable economic growth.