The impact of financial depth and efficiency on savings mobilization in Nigeria

Abstract

This paper anchored on examining the effect of financial sector development on savings mobilization in Nigeria from 1981 to 2023. Precisely, the study explored the relative impact of financial depth and financial efficiency on the savings mobilization in Nigeria. The study made use of the autoregressive distributed lag (ARDL) model, the standardized regression model, and Granger causality test in the analysis. The ARDL estimates indicated that both financial depth and financial efficiency initiated a desirable and significant effect on the savings level in Nigeria. Other key discoveries from the result were that both income and interest rate exerted positive and significant effect on the savings level in Nigeria. The standardized regression model result indicated that financial depth had a significantly larger impact on savings levels than financial efficiency. The Granger causality test supported the existence of a unidirectional causality from financial sector development to savings mobilization during the study period. The paper recommended for sustaining macro-stability in the financial system, boosting public policy for institutional reform and infrastructure, and proactive public policy for risk oversight and management.