The African Finance Journal, 24 Volume 20, Part 1, 2018
Rethinking the Interaction Between Banks and Markets in the
Nigerian Financial Architecture

Augustine C. Arize
Texas A&M University-Commerce

Ebere Ume Kalu
University of Nigeria

Nelson N. Nkwor
Federal University Ndufu-Alike



ABSTRACT

This paper reexamines the interplay between banks and capital markets in the Nigerian financial system. Using the ARDL/Bounds test cointegration approach and error correction model (ECM) technique on the time-series data obtained from the Central Bank of Nigeria (CBN) for the period 1981-2014, we found a long-run link between bank and market models--a complementary rather than competing association--which suggests a co-evolving development in the Nigerian financial structure. This finding underscores that, for enhanced economic growth, policy makers need to develop actionbased policies for the development of both banks and capital markets in the Nigerian financial system.