scholarly journals Determinants of Deposit Money Banks Lending Behaviour to Private Sector of The Economy in Nigeria (1986-2017)

2021 ◽  
Author(s):  
Tonia Akindutire
Keyword(s):  
Private Sector ◽  
Significant Relationship ◽  
Bank Lending ◽  
Series Data ◽  
Financial Deepening ◽  
Reserve Requirement ◽  
Long Run ◽  
Lending Rate ◽  
Specific Factors ◽  
Bank Specific Factors

The study examined those factors that determine the deposit money banks lending behavior to private sector of the economy in Nigeria using annual time series data spanning from 1986 to 2017. Secondary data were sourced majorly from CBN Statistical Bulletin(2017). In measuring the variables, determinants of deposit money bank lendingbehaviour to private sector were subjected to bank specific factors, regulation factors, financial deepening and macroeconomic factors. The bank specific factors were proxied by volume of deposit (VD) and lending rate (LDR), regulation factor was proxied by reserve requirement (RSR), financial deepening was proxied by ratio of money supply to GDP (M2G)while macroeconomic variables was proxied by inflation (INF). The estimation techniques used for the study were Augmented Dickey Fuller test, pair wise granger causality test and auto regressive distributed lag (ARDL). It was found that, the variables in the series were integrated of difference order l(0) and l(1) and there was significant relationship between bank lending behaviours and the identified determinants. In addition, it was revealed that, the variables move in a long run, however, among the variables of interest, volume of deposit and M2G determine bank lending behaviour in the short and long run while RSR, INF and LDR retard lending to private sector. The study also found that, causality runs from volume of deposit to private sector credit. Hence, the study concluded that, there is significant relationship between bank lending behaviour private sectorand its determinants. It was recommended that, bank lending rate should be brought down or flexible to meet up the categories of borrowers, since there is common knowledge that high interest rate discourages borrowers and influences banks to select bad loan offer which may affect the bank returns in the long run. Secondly, the reserve requirement dictated by CBN on deposit money banks should be reduced so as to enable banks to be more liquid for the private sector to access funds for their productive purposes and lastly, inflation should be made below 2 digit, as inflation above a digit may be unfriendly to economy activities thereby affecting the private sector output which is germane to the economic growth.

scholarly journals Influence of Bank Credits on the Nigerian Economy

2019 ◽  
Vol 5 (1) ◽  
pp. 1-9
Author(s):  
Idachaba Odekina Innocent ◽  
Olukotun G. Ademola ◽  
Elam Wunako Glory
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Banking Sector ◽  
Time Series Data ◽  
Unit Root Test ◽  
Series Data ◽  
Long Run ◽  
Integration Test ◽  
Lending Rate ◽  
Negative Effect

The aim of this study is to examine the influence of bank credits on the Nigerian economy using time series data covering the period from 1980 to 2017.Gross domestic product was used as proxy for the economy while credits to the private sector, public sector and prime lending rate were used as proxies of Banks credits. Unit root test was used to test stationary which reveals that all the variables were stationary at first difference. The regression analysis result shows that credit to the private sector have positive effect on Nigerian economy while credit to public sector and prime lending rate have negative effect on the Nigerian economy. The result of co-integration test presented reveals that there exist among the variables co-integration which means long-run analysis. It is recommended that, policy makers should focus attention on long-run policies to promote economic growth such as development of modern banking sector, efficient financial market, infrastructures.

scholarly journals Monetary Policy and Nigeria’s Economy: An Impact Investigation

2017 ◽  
Vol 9 (11) ◽  
pp. 218
Author(s):  
Micheal Chidiebere Ekwe ◽  
Amah Kalu Ogbonnaya ◽  
Cordelia Onyinyechi Omodero
Keyword(s):  
Monetary Policy ◽  
Private Sector ◽  
Central Bank ◽  
Money Supply ◽  
Substantial Reduction ◽  
Bank Lending ◽  
Series Data ◽  
Major Objective ◽  
Lending Rate ◽  
The Impact

The major objective of this study is to empirically analyze the impact of monetary policy on the economy of Nigeria. To achieve this major objective, the study made use of broad money supply (M2) and credit to the private sector (CPS) as the independent variables explaining the dependent variable which is the Gross Domestic Product (GDP). The time series data employed cover the period of 1996 to 2016 and have been collected from the Central Bank of Nigeria Statistical Bulletin. The statistical tool used in this study is the multi regression and student t-test with the aid of statistical package for social sciences (SPSS) to analyze the impact of the individual explanatory variables on the economy. The result indicates that the monetary policy in Nigeria does not have significant impact on the economy. At 5% level of significance, the broad money supply (M2) is 0.36 > 0.05 while the CPS shows 0.22 > 0.05. The result proves that the broad money supply has not been properly regulated and the bank lending rate to the private sectors so high that the economy has been adversely affected. The study therefore, recommends that the Central Bank of Nigeria should put every machinery in place to ensure that the monetary policy is geared towards economic growth through substantial reduction of bank lending rate to the private sector and proper regulation of broad money supply.

scholarly journals Financial deepening and economic growth in nigeria (1981-2012): A managerial economic perspective

2014 ◽  
Vol 4 (4) ◽  
pp. 120-131 ◽  
Author(s):  
Anthony Igwe ◽  
Chukwudi Emmanuel Edeh ◽  
Wilfred Isioma Ukpere
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
Money Supply ◽  
Study Data ◽  
Series Data ◽  
Equilibrium Path ◽  
Financial Deepening ◽  
Long Run ◽  
Short Run ◽  
The Impact

The objective of this study is to determine the impact of financial deepening on economic growth in Nigeria. The supply leading hypothesis was adopted as the theoretical framework of the study. Data for analysis was for the period 1981-2012 obtained from the Central Bank of Nigeria Statistical Bulletin. The explanatory variables were logged values of broad money supply/GDP and Credit to the private sector/GDP. The times series data were tested for stationarity using the ADF unit root tests of stationarity and were found to be stationary at first difference. The Engle-Granger Cointegration technique and Error correction model were used for the test of long run relationship. Findings reveal that money supply (MS) is positive and weakly significant in determining economic growth. However, credit to the private sector was negative and not significant in the short run. The speed of adjustment of the ECM is 25.51%. This implies that if there are short run fluctuations, GDP will converge to its long run equilibrium path at a speed of about 25.51% in each period .The conclusion is that financial deepening does not have the desired impact on economic growth in Nigeria. Hence, there is a need for increase and improvement in access to private credit to enhance economic growth and investment.

scholarly journals Non-bank financial institutions and economic growth: Evidence from Africa’s three largest economies

2017 ◽  
Vol 20 (1) ◽  
Author(s):  
Ronald Rateiwa ◽  
Meshach J. Aziakpono
Keyword(s):  
Economic Growth ◽  
South Africa ◽  
Financial Institutions ◽  
Time Series Data ◽  
Bank Lending ◽  
Series Data ◽  
The Sustainable Development ◽  
Long Run ◽  
The Relationship

Background: In order for the post-2015 world development agenda – termed the sustainable development goals (SDGs) – to succeed, there is a pronounced need to ensure that available resources are used more effectively and additional financing is accessed from the private sector. Given that traditional bank lending has slowed down, the development of non-bank financing has become imperative. To this end, this article intends to empirically test the role of non-bank financial institutions (NBFIs) in stimulating economic growth.Aim: The aim of this article is to empirically test the existence of a long-run equilibrium relationship between economic growth and the development of NBFIs, and the causality thereof.Setting: The empirical assessment uses time-series data from Africa’s three largest economies, namely, Egypt, Nigeria and South Africa, over the period 1971–2013.Methods: This article uses the Johansen cointegration and vector error correction model within a country-specific setting.Results: The results showed that the long-run relationship between NBFI development and economic growth is relatively stronger in Egypt and South Africa, than in Nigeria. Evidence in respect of Nigeria shows that such a relationship is weak. The nature of the relationship between NBFI development and economic growth in Egypt is positive and significant, and predominantly bidirectional. This suggests that a virtuous relationship between NBFIs and economic growth exists in Egypt. In South Africa, the relationship is positive and significant and predominantly runs from NBFI development to economic growth, implying a supply-leading phenomenon. In Nigeria, the results are weak and mixed.Conclusion: The study concludes that in countries with more developed financial systems, the role of NBFIs and their importance to the economic growth process are more pronounced. Thus, there is need for developing policies targeted at developing the NBFI sector, given their potential to contribute to economic growth.

Financial Deepening, Financial Intermediation and Nigerian Economic Growth: Time Variant Analysis

2019 ◽  
pp. 60-73
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Private Sector ◽  
Money Supply ◽  
Domestic Product ◽  
Financial Deepening ◽  
Causality Test ◽  
Real Gross Domestic Product ◽  
Long Run

This study examines financial deepening, financial intermediation and Nigerian economic growth. The main purpose is to examine the relationship between financial deepening and Nigerian economic growth while the specific objectives are to examine the impact of interest rate, capital market development, rational savings, credit to private sector and broad money supply on the growth of Nigerian. Secondary data of the variables were sourced from the publications of Central Bank of Nigeria (CBN) from 1981-2017. Nigerian Real Gross Domestic Product (RGDP) was used as dependent variable while Broad money supply (M2), Credit to Private Sector (CPS), National Savings (NS), Capital Market Capitalization (CAMP) and Interest Rate (INTR) was used as independent variables. Multiple regressions with E-view statistical package were used as data analysis techniques. Cointegration test, Augmented Dickey Fuller Unit Root Test, Granger causality test was used to determine the relationship between the variable in the long-run and short-run. R2, F – statistics and β Coefficients were used to determine the extent to which the independent variable affects the dependent variable. It was found from the regression result that Broad Money Supply, credit to private sector have position effect on the growth of Nigerian Real Gross Domestic Product while National Savings, Capitalization and Interest Rate on Nigeria Real Gross Domestic Product. The co-integration test revealed presence of long-run relationship among the variables, the stationary test indicated stationarity of the variables at level. The Granger Causality Test found bi – variant relationship from the dependent to the independent and from the independent to the dependent variables. The regression summary found 99.0% explained variation, 560.5031, F – statistics and probability of 0.00000. From the above, the study concludes that financial deepening has significant relationships with Nigerian economic growth. We recommend that government and the financial sector operators should make policies that will further deepen the functions of the financial system to enhance Nigerian economic growth.

scholarly journals Financial Deepening And Financial Performance Of Deposit Money Banks In Nigeria

2019 ◽  
Vol 6 (11) ◽  
pp. 179-191
Author(s):  
Mulkat Ajibola Yusuff ◽  
Fatimah Olabisi Olaniran-Akinyele
Keyword(s):  
Private Sector ◽  
Financial Performance ◽  
Time Series Data ◽  
Negative Influence ◽  
Series Data ◽  
Financial Deepening ◽  
Return On Equity ◽  
Market Capitalization ◽  
Distributed Lag ◽  
Autoregressive Distributed Lag

This study examines the effect of financial deepening on financial performance of Nigerian Deposit Money Banks using time-series data spanning 1990Q1-2017Q4. The financial performance is expressed by return on assets (ROA) and return on equity (ROE) with total bank liability, private sector credit and market capitalization as measure of financial deepening. The technique of analysis deployed is autoregressive distributed lag (ARDL) to co integration. The findings show that the effect of total bank liability is positive and significant. Market capitalization and private sector credit on the other hand exert negative and significant effect. The study concludes that financial deepening affect financial performance of Deposit Money Banks in Nigeria. It then recommends effective loan recovery strategy to mitigate the negative influence of private sector credit due to non-performing loans.

scholarly journals The Effect of Bank Specific Factors on Loan Performance of HFC Bank in Ghana

2016 ◽  
Vol 8 (7) ◽  
pp. 185
Author(s):  
Grace Ofori-Abebrese ◽  
Robert Becker Pickson ◽  
Eric Opare
Keyword(s):  
Sample Period ◽  
Loan Loss ◽  
Quarterly Data ◽  
Loan Loss Provision ◽  
Bank Management ◽  
Long Run ◽  
Specific Factors ◽  
Default Rate ◽  
Bounds Test ◽  
Bank Specific Factors

The default rate of loan in the country has been on the increase and worrying to all in recent times. This study assessed the effect of bank specific factors on the loan performance in HFC Bank in Ghana. The sample period used for the study was based on a quarterly data from 2008 to 2015. The study employed the ARDL bounds test of co-integration as an estimation technique to show the evidence of long run relationship among the variables. The study found bank’s loan interest rate, loan to asset ratio and bank’s loan loss provision over reserve as bank specific factors that influenced loan performance. These therefore showed that bank specific factors do have significant impact on loan performance. Hence, there is the need for bank management and regulators to undertake policies that can ensure efficiency in banks’ operations.

scholarly journals National Defence Expenditure and Its Implications on Economic Development in Nigeria

2021 ◽  
Vol 4 (1) ◽  
pp. 17-31
Author(s):  
Raymond M. ◽  
Ibyingibo S.
Keyword(s):  
Economic Development ◽  
Significant Relationship ◽  
Series Data ◽  
Ex Post ◽  
Long Run ◽  
Defence Spending ◽  
Misery Index ◽  
Capital Spending ◽  
Defence Expenditure ◽  
National Defence

The issue of security is presently a critical challenge for the Nigeria State: biggest democracy in Africa as reports of killings are plastered on a daily basis on both print and social media. This is unpalatable for a developing country like Nigeria that has its eyes set on improving the lot of its citizens and becoming a force to reckon with in the global economy. It is on this backdrop that this study set sail to examine the association between national defence expenditure and economic development in Nigeria. The study adopted Ex-post facto research design as the variables- Misery Index, CDEX and RDEX: cannot be manipulated as they are annual time series data sourced from the World Development Indicator and the Central Bank of Nigeria annual report from a period of 38 years covering from 1981 to 2018, which were in turn analyzed using the error correction model (ECM) method of estimation. The result of the Johansen cointegration test revealed that government capital spending on defence, recurrent spending on defence, foreign direct investment and misery index have common trends in the long run. The outcome of the normalized cointegration disclosed a negative and significant relationship between government capital spending on defence and misery index, while a positive and significant long run relationship exists between government recurrent spending on defence and misery index. The short run analysis pointed to a positive and significant relationship between previous year’s misery index and current year’s misery index. The study thus recommended that government defence spending be reassessed to make it development oriented and proper monitoring of defence spending be carried out.

scholarly journals Monetary Policy in Nigeria: Investigating the Role of Private Sector Credit

2020 ◽  
Vol 03 (12) ◽  
Author(s):  
Musa U. ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Private Sector ◽  
Bank Lending ◽  
Transmission Mechanism ◽  
Call Rate ◽  
Bank Lending Channel ◽  
Treasury Bill ◽  
Lending Channel ◽  
Lending Rate

This study examines the interest rate channel of monetary policy rates through private sector credits to prices. It applies an approach that is not common in monetary policy transmission mechanism in literature as many studies on transmission mechanism of monetary policy only examine statistical relationship between policy variables and target variables which may not be able to explain the pathway through which the monetary policies are transmitted. This paper uses mediation approach to assess the significance of causal path of interest rate through the bank lending channel. This paper dwelt on the transmission paths- from maximum interest rate, inter-bank call rate, treasury bill rate to prices through the private sector credits. The findings of this study lay credence to effective and significant transmission effects of interest rates (maximum lending rate, interbank lending rate and treasury bill rate) through private sector credit to prices. The paper concludes that maximum lending rate path has the highest significant transmission effect to prices. This is followed by the treasury bill rate and the inter-bank call rate respectively. The findings in this study is new in the case of Nigeria as no previous studies have applied mediation approach to the study of transmission mechanism of bank lending channel in Nigeria. Central banks should explore ways to effectively make policy towards effectively directing the monetary policy through maximum lending rate and treasury bill rates as they have the most significant paths through which the monetary policy rate is transmitted to prices.

Crowding Out of Private Sector in Tanzania: Government Expenditure, Domestic Borrowing, and Lending Rates

2020 ◽  
Vol 6 (1) ◽  
pp. 123-135 ◽  
Author(s):  
Enock Mwakalila
Keyword(s):  
Private Sector ◽  
Time Series Data ◽  
Government Expenditure ◽  
Series Data ◽  
Private Sector Development ◽  
Distributed Lag ◽  
Long Run ◽  
Lending Rates ◽  
The Government ◽  
The Impact

This study empirically analyzes the impact of government expenditure and domestic borrowing on credit to the private sector in Tanzania by increasing lending rates. Quarterly time series data are collected from 2004 to 2018. Autoregressive distributed lag (ARDL) model estimation with a bound cointegration test is used to establish the short- and long-run relationships, and the results are subjected to diagnostic tests for robustness. The result shows that government expenditure and domestic borrowing crowd out credit to the private sector by increasing the lending rate in the long run. This calls for the Tanzanian government to reduce some of its deficit spending and domestic borrowing, and instead look for another way to increase the tax revenue using loans from external sources to fund its budget deficit. Also, the study recommends that the government should put more effort on improving private sector development by making the country an easy place to do business, which in turn will increase the tax base through corporate tax and income tax from business employees.

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