Financial Institutions' Intermediation and Economic Development in Nigeria

Financial Institutions' Intermediation and Economic Development in Nigeria

Author by Dr. Tunji Siyanbola

Journal/Publisher: Journal Of Accounting And Finance In Emerging Economies

Volume/Edition: 5

Language: English

Pages: 33 - 46

Abstract

Purpose: The This paper examines the effect of intermediation capacity of the financial institutions on the Nigerian economic development (Real
Gross Domestic Product (RGDP). It is a causal-effect relationship study which made use of macro data obtained from Central Bank of Nigeria
(CBN) Statistical Bulletin from the period 1981-2016. The result of the Johansen co-integration test and ARDL bound test evidenced that there
exist a long-run relationship between financial institutions? activities and real GDP. ARDL regression model showed financial institution activities,
particularly the loans to the private sector significantly impacted on economic growth both in the short-run and long-run The study also found
that bank loans and advances, bank reserves and interest rate had insignificant negative impact on real GDP while credit to private sector
significantly affected economic development of Nigeria (RGDP) Thus, economic development of Nigeria is driven by the performance of deposit
money banks and concludes that the performance of deposit money banks has effect on the economic development of Nigeria. The study
recommended that the banking sector should increase lending to the private sector in order to engender economic growth through the
enhancement of entrepreneurial development

 


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