THE CONTRIBUTION OF BANKING SECTOR TO THE GROWTH OF THE NIGERIAN ECONOMY

Abstract

As a result of the fact that numerous economic actors in the productive sector are winding up due to their inability to obtain loans from the financial institutions or the cost of borrowing is excessive, this study examined the contributions of the banking sector to the growth of the Nigerian economy from 1986 to 2020. The study specifically examined the effects of bank’ credit, banks’ deposit and banks’ assets on economic growth in Nigeria which was measured using real GDP. The data were sourced from the CBN statistical bulletin and analyzed using the Ordinary Least Square Regression and the Granger causality test. The findings of the study revealed that bank deposits and bank credit have negative and significant effects on economic growth. On the other hand, banking assets has positive and significant effects on economic growth in Nigeria. The researcher therefore recommended among other things that; banks should restructure the conditions of the credits extended to the private sector in such a way that would ensure that such loans are beneficial for productivity and not counterproductive and that banks also restructure the model of handling deposits to ensure that they are channeled to the most beneficial and productive investment outlets