Ogege, Samson – Boloupremo, Tarila
Deposit Money Banks and Economic Growth in Nigeria
JEL: E02, E50, E51, E52, E58
deposit money banks, economic growth, per capita gross domestic product, Central Bank of Nigeria (CBN)
This paper examines the effect of deposit money banks intermediation role on economic growth and development in Nigeria. The main objective of the research was to ascertain the extent to which sectorial credit allocation by deposit money banks have influenced growth in the economy. Time series data covering the period 1973-2011 for deposits money banks credits in Nigeria and per capita gross domestic product were analyzed within the framework of Engle-Granger Representation Theorem; the approach estimated a co-integrating regression using the ordinary least square estimator, and then investigated the presence of a co-integration relation by examining the stationarity of the estimated residual series. The findings indicate that credit allocation to the production sector is significantly promoting economic activity. The implication that can be drawn from this study is that to ensure that the banking system performs its role of credit allocation effectively it must channel funds into productive investment and more productive uses; deposit money banks should act as efficient financial intermediaries devoted to allocating resources to the most productive uses.
Abeysinghe, T. and Tan, K. B. (1999). Small Sample Estimation of a Cointegrating Vector: An Empirical Evaluation of Six Estimation Techniques. Applied Economics Letters, 6, pp. 645-648. DOI: 10.1080/135048599352420
Barro, R. (1991). Economic Growth in a Cross Section of Countries. Quarterly Journal of Economics, 106(2), pp. 407-443. DOI: 10.2307/2937943
Barakat, M. and Waller, E. (2010). Financial Development and Growth in Middle Eastern Countries. International Business and Economics Research Journal, 9(11), pp. 121-123.
Calderon, C. and Liu, L. (2003). The Direction of Causality between Financial Development and Economic Growth. Journal of Development Economics, 72(1), pp. 321-334. DOI: 10.1016/S0304-3878(03)00079-8
Christopolous, D. K. and Tsionas, E. G. (2004). Financial Development and Economic Growth: Evidence from Panel Unit Root and Cointegration Tests. Journal of Development Economics, 73(1), pp. 55-74. DOI: 10.1016/j.jdeveco.2003.03.002
Demetriades, P. O. and Hussein, K. A. (1996). Does Financial Development Cause Economic Growth? Time-Series Evidence from 16 Countries. Journal of Development Economics, 51(2), pp. 387-411. DOI: 10.1016/S0304-3878(96)00421-X
De Gregorio, J. and Guidotti, P. E. (1995). Financial Development and Economic Growth. World Development, 23(3), pp. 433-448.
Engle, R. F. and Granger, C. W. J. (1987). Cointegration and Error Correction: Representation, Estimation and Testing. Econometrica, 55(2), pp.251-276. DOI: 10.2307/1913236
Fink, G., Haiss, P. and Mantler, H. C. (2005). The Finance-Growth Nexus: Market Economies vs. Transition Countries. Europainstitut Working Paper No. 64.
Ghimire, B. and Giorgioni,G. (2013). Finance and Growth: An Investigation into the Role of Internal, Bank and Equity Finance. Poznan University of Economics Review. 13(2), pp. 69-75.
Goldsmith, R. W. (1969). Financial Structure and Development. New Haven: Yale University Press.
Gross Domestic Product at Constant Basic Prices (1973-2011) [internet]. Available at http://www.cenbank.org/OUT/2011/PUBLICATIONS/STATISTICS/2011/PartC/PartC.html
King, R. G. and Levine, R. (1993). Finance, Entrepreneurship and Growth. Journal of Monetary Economics, 32(3), pp. 513-542. DOI: 10.1016/0304-3932(93)90028-E
King, R. G. and Levine, R. (1993a). Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics, 108(3), pp. 717-737. DOI: 10.2307/2118406
Levine, R. (1997). Stock Markets, Growth and Tax Policy. Journal of Finance 100(4), pp. 1445-1465.
Majid, M. S. A. and Said, M. (2010). Re-Examining the Finance-Growth Nexusin Malaysia and Indonesia. The IUP Journal of Applied Finance, Vol. 16(5), pp. 100-105.
McKinnon, R. (1973). Money and Capital in Economic Development. Washington DC: Brookings Institute.
Odedokun, M. O. (1996). Alternative Econometric Approaches for Analyzing the Role of the Financial Sector in Economic Growth: Time-Series Evidence from LDCs. Journal of Development Economics, 50(1), pp. 119-146. DOI: 10.1016/0304-3878(96)00006-5
Shan, J. Z. (2005). Does Financial Development Lead Economic Growth? A Vectorauto-Regression Appraisal. Applied Economics, 37(12), pp. 1353-1367. DOI: 10.1080/00036840500118762
Ufot, L. (2004). The Nigerian Financial System and the Role of Central Bank of Nigeria. Lagos: CBN Training Centre.
Zang, H. and Kim, Y. C. (2007). Does Financial Development Precede Growth? Robinson and Lucas Might Be Right. Applied Economic Letters, 14(1), pp. 15-19. DOI: 10.1080/13504850500425469