Effect of Bank Lending on Economic Growth of Nigeria
Abstract
Bank lending or credit is one of the monetary instruments used by the government through CBN to control banks as well as boosting the activities of the nation. This study examines the effect of lending by Deposits Money Banks’ (DMBs) on economic growth of Nigeria from 1981 to 2014. The population of the survey is 64 DMBs that includes 45 defunct and 19 existing DMBs operating in the Nigeria banking industry as at December 2015. The regression results indicate that DMBs’ lending has a positive and significant effect on economic growth. But DMBs’ lending rate has a positive and insignificant effect on economic growth. Thus, this study recommends that the management of DMBs should encourage their banks to increase bank lending to the main sectors of the economy that will use it in productive ventures, thereby boosting the economic growth of Nigeria. The reason is that one percent increase in DMBs’ lending will significantly increase the economic growth of Nigeria for the periods of study.
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References
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