Authorized for distribution by Peter Allum

financial sector development cause investment and growth? empirical analysis of the case of Ghana

ABSTRACT- This paper evaluates the need for the introduction of organized derivatives market in Nigeria. Derivatives play vital role in the development and growth of the economy through its crucial role of price discovery, market completeness, risk management and market efficiency. It attracts foreign capital flow, reduce cost of capital and will help to deepen the market if introduced. Although Nigeria is rich in natural resources such as oil and Gas and minerals, poor infrastructure, corruption and absence of robust financial and derivatives market has not helped in transforming the abundant resources to real economic gains and transformation. Nigeria’s economic transformation depends so much on developing a deep financial market, coupled with a dynamic derivatives market where most of her natural resources can be traded globally in a competitive and transparent manner.

This chapter reviews the broad financial-sector reforms in each of the four largest economies in Africa in the context of globalization and internal factors that may have influenced their form and impact. It examines the sector’s transformation caused by the movement toward financial consolidation in large economies such as South Africa and Nigeria by way of bankwide mergers and alliances, and considers the likelihood of consolidation extending across segments of the sector given the potential synergies between the banking, securities, and insurance sectors and the impact this would have on enhancing competitive conditions in financial services. A fundamental goal of these financial-sector reforms is to enhance the competitive conditions in financial services in African economies.