THE IMPACT OF DEPOSIT MONEY BANKS’ CREDIT ON ECONOMIC GROWTH OF NIGERIA (1981 – 2012)

ABSTRACT

This research work investigates the impact of banks’ credit on the growth of Nigerian economy between 1981 and 2012. The study was needed due to the central role which the deposit money banks’ credits play in the economic, financial and social development and growth of the economy. The study made use of secondary data in its analysis. Four explanatory variables (Credit to Other Sectors, Credit to Service Sector, Credit to Production Sector, and Credit to General Commercial Sector) were specified and used to establish a relationship with the level of economic growth in Nigeria measured by real gross domestic product, industrial gross domestic product and agricultural gross domestic product using the multiple regression tool. The specific finding of the study is that: there is a significant relationship between deposit money banks’ credit to other sectors and economic growth of Nigeria; there is a significant relationship between deposit money banks’ credit to services sector and Nigeria economic growth; there is a significant relationship between deposit money banks’ credit to the production sector and economic growth of Nigeria; there is no significant relationship between deposit money banks’ credit to general commerce sector and economic growth of Nigeria. The conclusion therefore is that deposit money banks’ credit enhances economic growth over the years. Based on the above finding the study recommends that: credit policies should be consistent and followed up to their logical conclusion, credit policies should be consistent for better implementation and result.

Keywords: Economic Growth, Deposit Money Bank, Gross Domestic Product, Industrial Gross Domestic Product, Agricultural Gross Domestic Product.