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A critical review of literature reveals that the debate on financial liberalization thesis still remains
largely unresolved. Thus, using a quarterly time series data, this study examines the nature of
causality among financial liberalization, real interest rate and savings mobilization as well as how they
interact with one another in Nigeria. Granger causality test was employed in determining the nature of
causality between financial liberalization and real interest rate on one hand and real interest rate and
savings mobilization on the other hand. Impulse response function of the VAR system was used to
ascertain how financial liberalization, real interest rate and savings mobilization interact with one
another. The granger causality test shows an absence of causality between financial liberalization and
real interest rate, a scenario that was replicated between real interest rate and savings mobilization.
The results of the impulse response function reveal a positive interaction between financial
liberalization and real interest rate as well as a positive or direct interaction between financial
liberalization and savings mobilization. We therefore recommend that the monetary authorities in
Nigeria should be consistent in evolving and maintaining policies that will enhance the full
maximization of the benefits of liberalizatio
