EFFECT OF FINANCIAL DEVELOPMENT ON SOCIAL SUSTAINABILITY IN NIGERIA

Abstract

The social dimension of sustainable finance relates to the application of financial principles to solving social problems in order to maximize social returns and benefits. By extension, the development of the financial system is expected to stimulate social improvements and benefits by bringing about social dividends on investments in social projects. This study aims to test the preceding assumption by investigating the effect of financial development on social sustainability in Nigeria between 1990 and 2024 using Autoregressive Distributed Lag (ARDL) regression technique. In the study, life expectancy, financial development index, and gross domestic product per capita extracted from World Development Indicators (WDI) were used to measure social sustainability, financial development, and economic growth respectively while government recurrent expenditure on social and community services extracted from Central Bank of Nigeria’s Statistical Bulletin was used to measure public social investment. Empirically, the study found that in both short- and long-runs, financial development has positive and significant effect on social sustainability in Nigeria and likewise, social and community investment exerts positive and significant effect social sustainability in Nigeria unlike economic growth which has negative significant effect on social sustainability in Nigeria. The study concludes that social sustainability in Nigeria is enhanced through financial development. This points to the need for increased investments in financial system that are geared towards development of the system. This will stimulate social sustainability in terms of higher life expectancy in Nigeria.