The Character of the State in Financial Development and Economic Growth

This article proposes a framework for conceptualizing the finance-growth theory in developing economies. The study investigates how the influence of the character of a state may inadvertently define the trajectory of financial development of the state and its resultant effect on economic growth. To analyze this assertion, a developing economy (Nigeria) which had experienced decades of autocratic military governance was studied using a vector co-integration analysis. A historical case review was conducted using secondary data. The historical review revealed evidence of three major characters while the econometric analysis revealed the presence of macroeconomic structures identifying at least five co-integrating vectors.