› › An Empirical Assessment Of The Impact Of Commercial Banks Lending On Economic Development Of Nigeria

An Empirical Assessment of the Impact of Commercial Banks' Lending on Economic Development of Nigeria

Author : Felicia Anyanwu

Publisher :

Page : 16 pages

File Size : 39,39 MB

Release : 2017

Category :

ISBN :

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Book Description

The pace of development in Nigeria economy which is rich in oil is not commensurate with the revenue from crude oil exports coupled with the increasing banking credit to the economy. This raises a question on efficiency and effectiveness of banks' in discharging it function of credit mobilization and distribution of resources to deficit economic units. In this regard, this study empirically assesses the impact of commercial banks' lending on economic development of Nigeria from 1986 to 2015 by specifically ascertaining the impact of commercial banks' lending on real gross domestic product and index of industrial production. The data sourced from the Central Bank of Nigeria statistical bulletin were diagnosed for serial correlation, heteroskedasticity and Ramsey Reset model fitness specification and stationarity. The Johansen co-integration envisaged a long run relationship between commercial banks' lending and gross domestic product but such could be said for index of industrial production. The granger impact assessment result shows that commercial banks' lending has significant impact on real gross domestic product and real gross domestic product on the other hand, has significant impact on credit to private sector. Index of industrial production was not significantly influenced by commercial banks' lending activities. The vector error correction model depicts that for achievement of long term growth and development of the Nigerian economy, commercial banks' lending is very pivotal as the high interest rate charged by commercial banks' remain a threat to the positive influence of banks' credit to the economy. The Central Bank of Nigeria should implement regulation to stop banks from centring loans and advances to a particular sector which is, oil and gas to improve credit flow to other strategic sectors, especially agriculture and industries to increase their contributions to gross domestic product of Nigeria. The monetary policy of the Central Bank of Nigeria should complement fiscal policies of the government to reduce the level of inflation in country, having regard to its negative effect on index of industrial production.



The Effect of Banking Sector Development on Economic Growth. Empirical Analysis from Ethiopian Economy Final

Author : Zelalem Birhan

Publisher : GRIN Verlag

Page : 85 pages

File Size : 33,5 MB

Release : 2023-11-16

Category : Business & Economics

ISBN : 3346970485

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Master's Thesis from the year 2020 in the subject Economics - Economic Cycle and Growth, grade: 3.33, Ethiopian Civil Service University, language: English, abstract: This paper examined the relationship between banking sector development and economic growth in Ethiopia. The paper also examines the effect of banking development on economic growth in Ethiopia and to establish which theory holds for Ethiopia between the demand-following and the supply-leading theory. Unlike the majority of previous studies, this study uses the newly developed ARDL-bounds testing approach to examine the relationship. The ARDL-bounds testing approach has numerous advantages over other co-integration techniques, especially when a short time-series dataset is used. In order to test the robustness of the empirical results, three proxies of bank-based financial development have been used; namely: 1) the domestic credit provided by the banking sector as a ratio of GDP, 2) broad money supply as a ratio of GD, 3) private credit as percentage of GDP. Annual time series data between the years 1987 and 2019 were used for the study, from the National Bank of Ethiopia (NBE) statistical bulletin. The structural break unit root test revealed that all the variables are stationary at their first difference; the bound test cointegration analysis established the existence of long run relationship among the variables. The ARDL revealed that domestic credit provided by the banking sector significantly affected economic growth in the long run, while private credit statistical significant and negatively affect economic growth in the short run during the period of study. The empirical results of this study show that the effect of banking sector development and economic growth in Ethiopia is sensitive to the proxy used to measure the banking sector development. The policymakers need to make policies that can lead to establishment of banking institutions in the rural areas which have limited access to banking services and create enabling legal environment for efficient allocation of credit to the private sector at the same time the supervisory organ shall establish conducive environment for banking institution which are engaging in loan granting for diversified economic sectors for private investment.



The Impact of Bank Credit on Industrial Development of Nigeria

Author : Damian Nwosu

Publisher : GRIN Verlag

Page : 23 pages

File Size : 28,66 MB

Release : 2013-06-27

Category : Business & Economics

ISBN : 3656453160

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Research Paper (postgraduate) from the year 2011 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, , language: English, abstract: The ongoing financial crisis has reinforced the importance of capital in the industrial development and economic growth of a country. In the last two years, industries have closed down owing to lack of capital occasioned by the global financial meltdown. From America, London, other European countries, Asia and Africa, governments have had to intervene in other to bail out some ailing industries and forestall total collapse of the economy. These show the importance of credit either from bank or any other means to industries. Recognizing the importance of capital in economic growth, Mackinnon and Shaw (1973), outlined the procedures for strengthening the financial sector of an economy so as to enable it play the all important role of providing capital for industrial development. Among the basic explanations for this is that the financial sector serves to reallocate funds from the supply side, given their investment opportunities, to the demand side with a shortage of funds. Thus, an economy with well-developed financial institutions will be better able to allocate resources to industries that yield the highest returns. The manufacturing sector is a catalyst to the modern economy and has a many dynamic benefits that are crucial for economic transformation, (Loto, 2005). The manufacturing sector is a leading sector. It helps to increase productivity in relation to import substitution, export expansion, creating foreign exchange earning capacity, raising employment and per capital income which according to Loto, (2005), widens the scope of consumption in dynamic patterns. Ogwuma, (1995) asserts that the manufacturing sector promotes the growth of investment at a faster rate than any other sector of the economy as well as wider and more efficient linkages among different sectors.





Credit Expansion in Emerging Markets

Author : Ms.Mercedes Garcia-Escribano

Publisher : International Monetary Fund

Page : 24 pages

File Size : 38,81 MB

Release : 2015-09-29

Category : Business & Economics

ISBN : 1513581929

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Book Description

This paper explores the contribution of credit growth and the composition of credit portfolio (corporate, consumer, and housing credit) to economic growth in emerging market economies (EMs). Using cross-country panel regressions, we find significant impact of credit growth on real GDP growth, with the magnitude and transmission channel of the impact of credit on real activity depending on the specific type of credit. In particular, the results show that corporate credit shocks influence GDP growth mainly through investment, while consumer credit shocks are associated with private consumption. In addition, taking Brazil as a case study, we use a time series model to examine the role that the expansion and composition of credit played in driving real GDP growth in the past. The results of the case study are consistent with those found in the cross-country panel regressions.



Lebanon-Determinants of Commercial Bank Deposits in a Regional Financial Center

Author : Mr.Harald Finger

Publisher : International Monetary Fund

Page : 23 pages

File Size : 42,32 MB

Release : 2009-09-01

Category : Business & Economics

ISBN : 1451873425

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Book Description

This paper empirically examines the demand for commercial bank deposits in Lebanon, a regional financial center. With Lebanon's high fiscal deficits financed largely by domestic commercial banks that rely on deposit funding, deposit growth is a key variable to assess government financing conditions. At the macro level, we find that domestic factors such as economic activity, prices, and the interest differential between the Lebanese pound and the U.S. dollar are significant in explaining deposit demand, as are external factors such as advanced economy economic and financial conditions and variables proxying the availability of funds from the Gulf. Impulse response functions and variance decomposition analyses underscore the relative importance of the external variables. At the micro level, we find that in addition, bank-specific variables, such as the perceived riskiness of individual banks, their liquidity buffers, loan exposure, and interest margins, bear a significant influence on the demand for deposits.



Namibia

Author : International Monetary Fund. African Dept.

Publisher : International Monetary Fund

Page : 29 pages

File Size : 50,1 MB

Release : 2016-12-08

Category : Business & Economics

ISBN : 1475559089

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Book Description

This Selected Issues paper assesses the impact of alternative fiscal consolidation strategies on Namibia’s growth. It uses a model developed at the IMF to gain insights on what would be a growth-friendly composition of the fiscal adjustment. The analysis suggests that a combined strategy of revenue and expenditure measures has lower negative effects on growth than a pure expenditure-based adjustment. Structural reforms improving the efficiency of public investment can further reduce the negative effect of consolidation on growth, and potentially strengthen growth. Overall, minimizing the negative impact of fiscal consolidation on growth requires combining revenue and expenditure measures, together with fiscal structural reforms.





Money and Capital in Economic Development

Author : Ronald I. McKinnon

Publisher : Brookings Institution Press

Page : 204 pages

File Size : 26,67 MB

Release : 2010-12-01

Category : Business & Economics

ISBN : 9780815718499

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Book Description

This books presents a theory of economic development very different from the "stages of growth" hypothesis or strategies emphasizing foreign aid, trade, or regional association. Leaving these aside, the author breaks new ground by focusing on the use of domestic capital markets to stimulate economic performance. He suggests a "bootstrap" approach in which successful development would depend largely on policy choices made by national authorities in the developing countries themselves. Central to his theory is the freeing of domestic financial markets to allow interest rates to reflect the true scarcity of capital in a developing economy. His analysis leads to a critique of prevailing monetary theory and to a new view of the relation between money and physical capital—a view with policy implications for governments striving to overcome the vicious circle of inflation and stagnation. Examining the performance of South Korea, Taiwan, Brazil, and other countries, the author suggests that their success or failure has depended primarily on steps taken in the monetary sector. He concludes that monetary reform should take precedence over other development measures, such as tariff and tax reform or the encouragement of foreign capital investment. In addition to challenging much of the conventional wisdom of development, the author's revision of accepted monetary theory may be relevant for mature economies that face monetary problems.



Banking Efficiency and Financial Development in Sub-Saharan Africa

Author : Sandrine Kablan

Publisher : International Monetary Fund

Page : 27 pages

File Size : 37,96 MB

Release : 2010-06-01

Category : Business & Economics

ISBN : 1455201197

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Book Description

This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. It uses stochastic frontier analysis to measure efficiency and a generalized method of moments system to explain financial development. SSA banks are found to be generally cost-efficient, but nonperforming loans undermine efficiency, which suggests that improvement in the regulatory and credit environments should improve efficiency. The political and the economic environment have held back financial development in SSA.