Author(s)

M. N. G. Omofa

Department of Economics, Kogi State University, Anyigba, Nigeria.

Parts of the major macroeconomic objectives of any nation are attaining high growth and employment rates. However these constitute major challenges in Nigeria as economic growth has either remained stunted or stagnant and unemployment rate very high. The financial sector is expected to push up the real sector thereby lowering unemployment rate. It is within this supply leading hypothesis that this work is situated. The 3 Stage Least Square method was used in estimating the Growth and Unemployment macroeconomic equations. The results showed that interest rate and exchange rate have effects on growth but only exchange rate was statistically significant. This seems to suggest that there is a disconnection between the Nigerian money market and the real sector. However interest rate and exchange rate were significant in influencing the rate of unemployment in Nigeria. The goodness of fits for each of the two equations was high. The simulation results showed that the shock in the financial sector has serious implications for the economic growth and unemployment. The work therefore suggests that interest rate and exchange rate should not be left absolutely to the dictate of the market forces. Occasionally government should intervene in these markets as the time requires.

Economic Growth, Financial Sector, Unemployment, Money Market, Capital Market, Foreign Exchange Market, Simulations, 3 Stage Least Square, Interest Rate and Exchange Rate

Omofa, M. (2017) An Assessment of the Effect of Financial Sector Development on Growth and Unemployment in Nigeria: 1986-2012. Open Journal of Business and Management, 5, 34-50. doi: 10.4236/ojbm.2017.51004.