The Role of Banks in Capital Formation and Economic Growth: The Case of Nigeria
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This stud; investigate the role of banks in capital formation and economic growth."
The case of Nigeria for tl1e period 1980-2009. The economies of all market-oriented nations
'denend o,; 1 the ,efficient operation, of complex and delicately balanced systems of. money~ an
cred~ it. Banks are an indispensable element in these system. . This stud;{ employed tn1~ e
Ordinaty Least square netwd in carrying m;t tl1e research. The expanatoty .variables
employed include Commercial Banks Deposit Liability (BDL), Maximum Lending Rate
(MLR), 1 Commercial Banks' Credit (CBC) and Investment by banks in Nigeria (BlV) . . The
'dependent variables are Gross Fixed Capital Formation (GFCF) and Gross Domestic
Product (GDP), which is a measure of a nation's economic performance- economic growth
{!l this instCfnce From the various test carried ; ut it was 'find out that Commercial Ba~.~
Deposit Liabilities, is fastic to Gross Fixed Capital Formation in Nigeria. This positivity of
the coefficient .of Commercial Banks Deposit Liabilities "is 'in conformity to tfze economic"a
prior/ expectation ·of a positive impact of Col}vnercial Banks Drmoit Liabilities on Gross
Fixed,Capital Formation. Also, the regression result shows that 'Commercial Banks Credits
(CBC) has a positive ; impitct of Gross Fixed Capital Formation (GFCF). '!t is therefore
._econmendea that efforts should be made by the monetary authorities to effectively manage
the banks' maximum /ending. This policy, thrust will most likely' result into increased
investment activities which will enhance capital formation in •Nigeria needed for its reflector investments and industrial growth. • r
Keywords
HG Finance