Abstract
Research Purpose: The elusive nature of economic growth in Nigeria despite financial deepening efforts raises pertinent questions. In this study, we examine the impact of savings and credit co-operative societies (SACCOs) and other financial institutions on financial deepening, financial development, and economic growth in Nigeria from 1982 to 2021. We delve into the specific effects of financial deepening on growth, the influence of financial institutions and market deepening on growth, and the role of financial co-operatives in enhancing financial deepening.
Methodology: This research utilises secondary data from the IMF Findex database and the Federal Directorate of Co-operative Societies. The data analysis employs error correction modelling (ECM) to establish relationships between the variables.
Findings: Our analysis reveals that while the financial deepening index has a positive, albeit insignificant, effect on economic growth, the deepening of financial markets enhances growth, while deepening of financial institutions has a depressing effect. Notably, deepening of finance in co-operatives significantly enhances financial development in Nigeria through co-operative society investment channels.
Conclusion: We conclude that financial deepening does influence economic growth in Nigeria, and financial cooperatives play a crucial role in driving financial deepening.
Recommendations: To engender efficient financial deepening, we recommend institutional reforms in the banking sector. Additionally, we suggest leveraging savings and credit co-operatives as a potent tool for further financial deepening. The policy implication is clear: co-operatives should not be neglected in the pursuit of economic growth.
Key words: Savings and Credit Co-operative societies (SACCOs), Financial Deepening, Financial Institutions, Financial Markets, Economic Growth.
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