This study examines the relationship between fiscal deficit financing and financial market development in Nigeria. The dependent variable is financial market development, while the independent variable is fiscal deficit financing. The study employs a quantitative research approach, using secondary data collected from government and financial institutions spanning multiple years. The data is analyzed through econometric modeling, regression analysis, and correlation techniques to determine the impact of fiscal deficit financing on Nigeria’s financial market. The findings reveal that excessive reliance on fiscal deficit financing, particularly through domestic borrowing, adversely affects financial market stability by increasing interest rates and reducing private sector investment. However, moderate and well-structured deficit financing contributes positively to market liquidity and expansion. The results indicate that Nigeria’s financial market development is negatively affected by unchecked deficit financing, leading to reduced investor confidence and market inefficiencies. The study recommends prudent fiscal management, diversification of revenue sources, improved transparency in public spending, and policies that encourage private sector participation in the financial market. Additionally, monetary and fiscal policy coordination is essential to balance economic growth with market stability. Strengthening financial institutions and promoting capital market deepening are also suggested to enhance financial market development in Nigeria. By implementing these recommendations, Nigeria can achieve sustainable economic growth while minimizing the negative effects of fiscal deficit financing.

Keywords: Fiscal Deficit Financing, Financial Market Development, Nigeria, Economic Growth, Public Debt Management