The paper examines the effect of financial intermediation and economic growth in Nigeria. Annual time series data covering 1970 to 2013 were used to analyze the long run and short run relationships between the development of financial intermediaries and economic growth along with the direction of causality between the indicators. The results of the unit root test show that the variables are integrated at I(0) and I(1). Using bound testing technique for cointegration, a stable long-run relationship was found between the indicators of financial intermediation and the economic growth. Error correction coefficient was statistically significant. It was concluded that credit to private sector and financial savings have positive impacts on economic growth in both short runs and long-run. However, money supply has a negative influence on economic growth. The causality test reveals a bi-directional relationship between inflation and economic growth while a unidirectional causality moves from financial savings to economic growth. It is recommended that: Financial institutions, either promoted by government or the private sector, should offer more credits to the private sector with bearable interest rates; the government should adopt inflation reduction policies and also intensify export diversification policies and incentives; and the government should ensure stable political and economic climate conducive to investment as well as finance its budget deficit from real resources.