Volume 2 - Issue 2, March - April 2026

Financial Sector Development and Expansion in Nigeria: An Empirical Investigation This study examines the impact of financial sector development on export expansion in Nigeria, covering the period from 1986 to 2024. Despite numerous financial reforms aimed at diversifying the economy, Nigeria remains heavily reliant on primary commodity exports, particularly crude oil. This research utilizes the Autoregressive Distributed Lag (ARDL) bound testing approach and Granger Causality tests to analyze the long-run and short-run dynamics between financial deepening indicators—such as credit to the private sector (CPS), broad money supply (M2) as a ratio of GDP, and lending rates—and export performance. Findings reveal a positive and significant long-run relationship between credit allocation to the private sector and non-oil export expansion, suggesting that improved access to credit facilitates capacity utilization for local producers. However, the study also identifies that high lending rates and inefficient financial intermediation (captured by wide interest rate spreads) act as significant deterrents to export competitiveness. Granger causality results indicate a unidirectional flow from financial development to export growth, supporting the "supply-leading" hypothesis. The paper concludes that while the financial sector has the potential to drive export diversification, structural bottlenecks in credit delivery must be addressed. It recommends that the Central Bank of Nigeria (CBN) implement more targeted credit schemes for the manufacturing and agricultural sectors to bolster the nation’s non-oil foreign exchange earnings.

Bello H.T, Jonah Kingdom Chinecherem, Popoola Olalekan Nasir, Abisola Runsewe, Monsurah Abiola Abdulahmed, Hawwa Olabisi Omosanya, Oladeji Faith Olamide, Anthonio Nofisat Ayomide,"Financial Sector Development and Export Expansion in Nigeria" International Journal of Advanced Multidisciplinary Research and Educational Development, V2(2): Page(1052-1065) Mar-Apr 2026. ISSN: 3107-6513. www.ijamred.com. Published by Scientific and Academic Research Publishing.