ABSTRACT
The study examined the effect of financial system on economic growth in Nigeria and South Africa 2001 and 2020. To this end, this study decided to regress growth of real per capita income with relative financial system size (FSZ) and relative financial system activities (FSA) to finds answers. The study is comparative in nature and made use of the autoregressive distributed lag (ARDL) modeling technique. It was found that the economies of Nigeria and South Africa are both bank-based in size and activities. Findings from the study showed that only financial structure size was negatively significant in South Africa, and not significant in Nigeria. Neither the bank-based nor the market-based views are consistent with the results; rather, it is consistent with the views of financial services and law and finance: financial structure is not an effective way to distinguish financial systems. It was then recommended that there should be strengthening of the legal laws and enforcements in Nigeria and South Africa.
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