Commercial Bank Lending and Economic Growth—The Nigerian Experience 1970-2013Report as inadecuate




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This paper examines the effects of commercial bank lending on economic growthin Nigeria for the period 1970-2013, using the rise in non-oil GDP as a measureof economic growth. The theoretical underpinning of the role of commercial banklending in economic growth is based on the combination of the quantity theory ofmoney and aggregate production function. To determine the relationship between the two variables, therefore, a preliminaryco-integration analysis unit root test was carried out on the variablesat levels. Also, the relative rates of changes were statistically determined forthe variables and multiple regressions were carried out for the variables withthe basic regression model defined as Yr = a1+a2Lr+a3Br+a4Br-1+e1. The studyshowed an increasing importance of commercial bank lending to economic growth inNigeria, more so that commercial banks accounted for over 60% of total loans providedby the banking system for the period. The linear regression model OLS revealeda positive correlation between economic growth and commercial bank loans for oneyear lagged period showing some slowness in the transmission mechanism between thefinancial and the real sectors of the economy. The overall results therefore conformto our a priori expectation that bank credit generally is an enabler for economicgrowth, although at a fairly sluggish pace.

KEYWORDS

Economic Growth, Non-Oil GDP, Commercial Bank, Bank Credit

Cite this paper

Ajibola, J. 2015 Commercial Bank Lending and Economic Growth—The Nigerian Experience 1970-2013. Open Access Library Journal, 2, 1-8. doi: 10.4236-oalib.1101431.





Author: Joseph Olusegun Ajibola

Source: http://www.scirp.org/



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