IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 1 2016

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BANKING SYSTEM CREDIT AND ECONOMIC ACTIVITIES IN NIGERIA

Odi, Ebi Reuben, Olulu-Briggs, Omiete Victoria

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Abstract

This paper tends to explore how banking system credits have prompted economic activities in the Nigerian economy. We got annual time series data for the period from 1960 to 2012 from the Central Bank of Nigeria (CBN) database; and used the multiple linear regression technique. First, the Johansen co-integration test, in their first differences, indicates one co-integrating equation at the 0.05 level. As a result, we can establish that there exists a long- run relationship between GDP, Production and Commercial activities in Nigeria. Second, the F-statistics from the adjusted Equation estimation test show that both the lagged terms of the variables are statistically different from zero; hence previous production and commercial activities can engender economic growth. Third, the Pairwise Granger causality test exhibit that there exist a bi-directional causality from Production to Commerce and from Commerce to Production; and a uni-directional relationship from GDP to Production. However, there is no causation from Commerce to GDP or from Production to GDP. The results are to a certain extent consistent with previous studies on Bank credits as it relates to Economic growth. Thus, it recommends that the government needs to be more policy-proactive in making the Nigerian productive and commercial sectors more competitive to attain global benchmark.

keywords:

Banking system credits, economic growth, Commerce, Production, VAR model

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