EFFECT OF FINANCIAL DEVELOPMENT ON FINANCIAL INNOVATION IN NIGERIA

Abstract

Financial sector is crucial for the development of a well-functioning market as it facilitate capital
inflows, mobilize savings for productive investment and facilitates the conduct and growth of an
economy in the world. Despite the importance of financial sector development in Nigeria, financial
institution operating in financial market were confronted with drastic changes where by old ways
of doing business were no longer profitable and sustainable and unable to acquire fund with their
traditional financial instruments. Against this background, the study investigated the effect of
financial sector development on financial innovation in Nigeria. The study employed secondary
data obtained from central bank of Nigeria statistical bulletin and World Bank database between
2011 and 2017. The data obtained was subjected to system General Method of Analysis (GMM)
estimator. The study concluded that upward trend of process innovation significantly influence the
in depth of finance. The study recommends policy makers should design policies which will
promote and enhance the relationship between financial innovation and financial development in
other to increase the supply and provision of financial service.