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The study analyzed the causality between financial development and economic growth in Nigeria using annual time series data from 1981 to 2023. The study used money supply to GDP ratio, private sector credit to GDP ratio, market capitalization to GDP ratio, banking sector assets to GDP ratio, and savings to GDP ratio to measure financial development while real GDP was used to measure economic growth. The analysis based on the Granger causality test revealed that unidirectional causality existed between financial development and economic growth, as real GDP Granger caused the banking sector assets to GDP ratio, money supply to GDP ratio, and private sector credit to GDP ratio, which implied evidence of the demand-following hypothesis of financial development. There was a long-run relationship between financial development and economic growth where it was found that an increase in the private sector credit-to-GDP ratio, market capitalization-to-GDP ratio, and banking sector assets-to-GDP ratio had diminishing influence on economic growth. It was also found that, in the short run, the private sector credit-to-GDP ratio and banking sector assets-to-GDP ratio had a negative influence on economic growth while other financial development indicators emerged with positive coefficients. It was recommended, among other things, that a higher macroeconomic stability level be sustained towards accelerating growth, which is useful in enhancing the level of financial development in Nigeria.

Keywords: Financial Development, Economic Growth, ARDL, Bounds Test, Nigeria.

Dynamic economic processes influenced by random events and positive feedbacks deviate significantly from classical equilibrium models. They often exhibit multiple equilibria, path dependence, and lock-in, with outcomes strongly shaped by early events. Path dependence and feedback strength critically influence long-term outcomes. Increasing returns systems exhibit self-reinforcing behavior, where small early leads can become dominant outcomes. These systems often have multiple equilibria, where outcomes are contingent, not inevitable. In contrast, decreasing returns processes tend toward single equilibrium (balance), reducing path dependence. Processes with threshold-like or stepwise reinforcement show extreme sensitivity, behaving almost deterministically based on early conditions.

Keywords: positive feedback, increasing returns, nonlinear process.

This study provides novel empirical evidence on the institutional trust crisis facing International Financial Institutions (IFIs) in Tunisia, employing instrumental variable analysis of World Values Survey (2020) data. Our findings reveal a striking paradox: while IFIs promote governance reforms, corruption perceptions strongly erode public confidence (?=-0.18, p<0.01), with only 10% of Tunisians expressing trust versus 51-57% actively distrusting IMF and World Bank programs. The analysis uncovers three critical dynamics: (1) educated citizens show 12-14% lower confidence due to austerity-induced graduate unemployment, (2) women exhibit 34% greater trust in World Bank initiatives, and (3) wealthier respondents paradoxically combine high corruption perceptions with greater IFI approval. Methodologically, we address endogeneity through innovative instruments assessing economic competitiveness and meritocracy beliefs. The results necessitate a paradigm shift in IFI operations - from technocratic conditionality to legitimacy-sensitive programming. We propose a Trust Indicator Framework emphasizing: (a) transparency mechanisms in loan negotiations, (b) gender-responsive program design, and (c) participatory reform implementation. These context-specific insights redefine effective financial governance in transitional democracies.

Keywords: Corruption’s perception, Confidence in IFIs, WB, IMF, Tunisia.
JEL Classification: G28-C26-F53

This study analyses the effects of financial development on global value chains (GVCs) participation in developing countries from 1990-2019, while assessing the role of digital transformation. The generalized method of moments (GMM) was employed to overcome endogeneity problems. Driscoll and Kraay’s estimation approach is further employed for the robustness check. The findings indicate that financial development increases GVC participation (general, upstream and downstream) in developing countries. These positive effects are more intensive when financial development is modulated by digital transformation. Furthermore, the results show that the U-inverted hypothesis between financial development and GVC participation is not verified in this study. Moreover, the findings show that digital transformation can be used as an effective channel to enhance the effect of financial development on GVC participation. However, these results indicate that developing countries must prioritize ICT access and use to better enhance the effects of financial development on GVC participation.

Keywords: Developing countries, cross-sectional dependence, digital transformation, financial development, global value chains.
JEL Codes: C21, O33, O16.