Banking Sector Credit and Economic Growth in Nigeria: An Empirical Investigation

Authors

Aniekan O. Akpansung, Department of Economics, Modibbo Adama University of Technology, Yola, NigeriaFollow
Sikiru J. Babalola, Department of Economics, Modibbo Adama University of Technology, Yola, Nigeria.

Keywords

Bank credit, Economic Growth, Two-Stage Least Squares (TSLS)

Abstract

The paper examines the relationship between banking sector credit and economic growth in Nigeria over the period 1970-2008. The causal links between the pairs of variables of interest were established using Granger causality test while a Two-Stage Least Squares (TSLS) estimation technique was used for the regression models. The results of Granger causality test show evidence of unidirectional causal relationship from GDP to private sector credit (PSC) and from industrial production index (IND) to GDP. Estimated regression models indicate that private sector credit impacts positively on economic growth over the period of coverage in this study. However, lending (interest) rate impedes economic growth. Over and above, the paper recommends the need for more financial market development that favours more credit to the private sector with minimal interest rate to stimulate economic growth.

Issue

2

Volume

2

First Page

51

Last Page

62

Recommended Citation

Akpansung, Aniekan O. and Babalola, Sikiru J. (2011) "Banking Sector Credit and Economic Growth in Nigeria: An Empirical Investigation," CBN Journal of Applied Statistics (JAS): Vol. 2: No. 2, Article 6.
Available at: https://dc.cbn.gov.ng/jas/vol2/iss2/6