Journal of Research and Rural Planning

Journal of Research and Rural Planning

Capital Market Efficiency, Financial Innovation and Industrialization in Nigeria

Document Type : Original Article

Authors
Kazeem Seun Belau
Russell Olukayode Christopher Somoye
Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria
10.22067/jrrp.v14i4.2305-1146
Abstract
Purpose- Nigeria remains heavily import-dependent and under-industrialized despite abundant natural resources and repeated industrial development programmes. This study investigated how capital market efficiency and financial innovation influence industrialization in Nigeria, with specific focus on their relevance for rural and regional economic transformation.
Design/methodology/approach- The study employed an ex-post facto research design using secondary annual time-series data from 2010-2023 obtained from the Central Bank of Nigeria Statistical Bulletin. Descriptive statistics and the Autoregressive Distributed Lag (ARDL) model were applied to examine both short-run and long-run relationships among stock market depth and liquidity, stock market efficiency, fintech adoption, credit to the private sector, inflation, and industrial output. The study also emphasized the rural and regional development implications of financial sector performance.
Finding- Results showed that Nigeria’s manufacturing sector contribution to GDP remains structurally low, and market depth is highly volatile. Fintech adoption exhibits the highest dispersion due to periodic surges in electronic payments, while stock market liquidity is relatively stable. ARDL estimates reveal that market liquidity and market depth exert positive and significant effects on industrialization, whereas fintech adoption and private-sector credit exert negative significant effects. Inflation is insignificant. The bounds test confirms strong long-run cointegration among the variables. The findings indicated that Nigeria’s industrialisation is largely driven by short-run financial dynamics, particularly stock market liquidity and credit allocation efficiency. High fintech activity, when weakly regulated, may facilitate capital flight and reduce productive sector investment. Strengthening capital-market institutions, stabilising monetary conditions, and improving rural credit access are essential for sustainable industrial development.
Originality/value– This study contributed to the industrialization literature by integrating capital-market efficiency, financial innovation, and rural or regional development perspectives within a unified ARDL framework for Nigeria. It provided new evidence on how financial sector dynamics shape industrial growth in emerging economies.
Keywords
Industrial output
Stock market depth
Stock market efficiency
Fintech adoption
ARDL model
Rural development
Subjects
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  • Receive Date 20 September 2025
  • Revise Date 10 November 2025
  • Accept Date 04 December 2025