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CREDIT CREATION AND FINANCIAL INSTABILITY IN NIGERIA

Authors: BINUYO Babatunde , Ocharive Aruoriwo C.

Publication Type: Journal article

Journal: Arabian Journal Of Business And Management Review (oman Chapter)

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Abstract

The study investigated “Credit Creation and Financial Instability in Nigeria”. It is argued that it is
credit creation that fuels bubbles, makes the system unstable and leads the economy into crises. Time
series data collected from the Central Bank of Nigeria (CBN) Statistical Bulletin between periods of
(1992- 2015) was used to regress the model using The Error Correction Model (ECM) technique. The
ECM showed a short run and long run relationship in the model. The economy adjusts back to
equilibrium at 59%. As the lending rate decreases, while money supply and loans to deposit ratio
increases, credit created to real estate increases. The implication of this is that an increase in
speculative credit causes a bubble and eventually a burst in asset prices leading to banking sector
crisis where debtors are unable to pay back loans when due. The central bank should get more
involved, in form of enforcing credit-control, to restrict speculative credit creation.

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BINUYO,B. Ocharive,A.C . (2017). CREDIT CREATION AND FINANCIAL INSTABILITY IN NIGERIA, 6 (), 1-1.

BINUYO,B. Ocharive,A.C . "CREDIT CREATION AND FINANCIAL INSTABILITY IN NIGERIA" 6, no (), (2017): 1-1.

BINUYO,B. and Ocharive,A.C and . (2017). CREDIT CREATION AND FINANCIAL INSTABILITY IN NIGERIA, 6 (), pp1-1.

BINUYOB, OchariveAC, . CREDIT CREATION AND FINANCIAL INSTABILITY IN NIGERIA. 2017, 6 ():1-1.

BINUYO,Babatunde , and Ocharive,Aruoriwo C. . "CREDIT CREATION AND FINANCIAL INSTABILITY IN NIGERIA", 6 . (2017) : 1-1.

B.Babatunde & O.Aruoriwo C. , "CREDIT CREATION AND FINANCIAL INSTABILITY IN NIGERIA" vol.6, no., pp. 1-1, 2017.

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