Towards Financial Development in Nigeria

Does Central Bank Independence Matter?

Authors

  • Osamede Success Abusomwan
  • Stanley Osagie Idemudia University of Benin

Abstract

The Nigerian financial sector remains shallow and inefficient compared to other emerging economies. The Central Bank of Nigeria, as the apex financial regulator, is responsible for ensuring monetary stability and promoting financial development. Concerns over its independence and limited literature on the link between Central Bank Independence and financial development motivate this study. Using multiple established indexes of Central Bank Independence, including Romelli, Grilli-Masciandaro-Tabelli, and Cukierman-Webb-Neyapti, over the period 1990 to 2022, and employing Dynamic Ordinary Least Squares and ECM models, the results show a significant positive relationship between Central Bank Independence and financial development in both the short and long run. Adjustment to long-run equilibrium after short-run (about 80%) shocks is high, and findings are robust under the ARDL methodology. Granger causality confirms that Central Bank Independence drives financial development. The study recommends revising CBN laws to strengthen its independence and enhance financial sector development in Nigeria.

 

Keywords: Central Bank of Nigeria; Central Bank Independence; Dynamic Ordinary Least Squares; Financial Development; Nigeria.

Author Biography

Osamede Success Abusomwan

Dr. Osamede Success Abusomwan is an Associate Professor in the Department of Economics at the University of Benin, Benin City, Edo State, Nigeria. His research interests include monetary economics and financial economics.

Downloads

Published

24.08.2026

How to Cite

Abusomwan, O. S., & Idemudia, S. O. (2026). Towards Financial Development in Nigeria: Does Central Bank Independence Matter?. Ecoforum Journal, 15(3). Retrieved from https://ecoforumjournal.ro/index.php/eco/article/view/3376

Issue

Vol. 15 No. 3 (2026)

Section

Accounting, Finance, Statistics and Economic informatics

License

An copyright form will have to accompany your submission (the signed copyright form has to be scanned). You can get the .PDF form version on-line (see the link bellow). Authors are responsible for obtaining any security clearances. All authors have to sign the copyright transfer form. There are some restrictions regarding the length of the copyright file, so please read carefully the instruction provided there.