Legal-Based Financial Structure and Long-Run Growth: Evidence from Nigeria

This paper examines specifically the impact of legal-based financial structure on long-run economic growth in Nigeria, using time serial data for 17 year period: 1992 – 2008. Time series general method of movement (GMM) regression was used to estimate the necessary models. The growth rate of gross domestic product per capita was adopted as the dependent variable, while the independent variables were the country’s legal codes. The study also controlled for government expenditure as a ratio of GDP and gross capital formation as ratio of GDP. The regression result shows that the components of legal-based financial structure are negative and non-significant in promoting economic growth in Nigeria. The paper recommends for the restructuring of the legal system in enforcing contracts.