Liberalization and Economic Growth in Nigeria PETER IFEANYI OGBEBOR, ADESOLA RUKAYAT AWONUGA, IFEOLUWA OLADAPO-DIXON Department of Finance, Babcock University, Ilishan-Remo, Ogun State, NIGERIA Abstract: - This study looked at how Nigeria's financial markets, economic growth, and liberalization interacted between 1986 and 2020. To account for both the short-run and long-run effects, the study used an econometric model of autoregressive distributed lag modelling. To check the time series qualities, several diagnostic tests were carried out, including descriptive statistics, a correlation matrix, and a unit root test. Inferences were drawn at the 5% significant level. The study's findings confirmed that while trade openness had a statistically significant negative impact on economic growth [ =-1.4391; P -value = 0.0000], foreign ownership of shares had a statistically favorable impact [ = 0.3027; P -value = 0.0000]. Additionally, it was shown that during the studied years, inflation was negative but minor in relation to economic growth [ = -0.0032; P-value = 0.5870]. Based on the study's findings, it was advised that an enabling macroeconomic environment be present to make use of the advantages that financial liberalization and the financial market have to offer. Financial liberalization requires a favorable macroeconomic climate, according to studies. Macroeconomic instability makes information asymmetry worse and makes the financial sector more vulnerable. If the macroeconomic indicators are stable, foreign investors will be more eager to make investments in Nigeria. Key-Words: - Auto Regressive Distributed Lag, Economic Growth, Financial Markets, Gross Domestic products, Liberalization. Received: January 2, 2023. Revised: May 21, 2023. Accepted: June 2, 2023. Published: June 13, 2023. 1 Introduction Achieving a high degree of sustainable economic growth has been many developing and emerging nations' primary goal. Studies have developed numerous models and ideas to explain the phenomenon of economic growth in response to the demand to accelerate it. Economic growth, which is defined as a percentage increase in the volume of goods and services generated in the economy, occurs when a country's GDP increases. This shows that, regardless of whether the increase is happening more quickly or more slowly, economic growth is defined as a rise in national income that is reflected in the economy's capacity to generate goods and services. [1], defines economic growth as an increase in a nation's rate of goods and services generated over a given time period. The increase in the real gross domestic product (GDP) or other measures of aggregate income, which are generally stated as the real GDP's annual rate of change, is what he went on to define as economic growth. Therefore, what drives economic growth is greater productivity, which includes creating more goods and services with the same inputs of labor, capital, energy, and materials. A relatively modest growth rate, poor industrial output, underdeveloped financial markets, and periodic balance-of-payment crises, on the other hand, have been recent characteristics of economic growth in developing economies, [2]. The stock market at the global level consolidates financial system expansion, enhancing the influence of the latter on economic growth. [3], asserts that establishing a financial market is crucial to achieving economic growth, particularly in developing nations. This suggests that financial market activities stimulate economic growth, primarily by facilitating easier access to credit, which boosts private sector investment. As a result, the effective transfer, allocation, and repatriation of financial resources is the main function of the financial market. But only a WSEAS TRANSACTIONS on BUSINESS and ECONOMICS DOI: 10.37394/23207.2023.20.114 Peter Ifeanyi Ogbebor, Adesola Rukayat Awonuga, Ifeoluwa Oladapo-Dixon E-ISSN: 2224-2899 1278 Volume 20, 2023