IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 8 NO. 4 2023
DOI: https://doi.org/10.56201/ijefm.v8.no4.2023.pg75.96

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An Investigation of the Impact of Financial Liberalization Reforms on Credit to the Private Sector in Nigeria

Benson Emmanuel PhD, Emmanuel,Adah John

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Abstract

This study examines the effects of financial liberalization on credit to the private sector in the Nigerian economy from 2000 to 2021. This was aimed at ascertaining how DEP representing banking sector deposits, IRS representing interest rate spread and MPR representing monetary policy rates has stimulated the credit to the private sector in Nigeria. Historical data was collated and estimated employing the ARDL form of Ordinary Least Squares (OLS) technique. The empirical results indicate that bank deposits was positively significant to private sector credits while monetary policy rates were negatively significant. On the contrary, interest rate spread had negative impact but not statistically significant. On the basis of the findings of this study, the following recommendations are made.The monetary authorities have to regularly review their monetary policy direction to bring monetary policy rates lower than it is. Policies that reduce interest rate spread be pursued to enhance the performance of the credit to the private sector.

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References:

Abuka, C. A. &Egesa, K . A. (2007). An assessment of private sector credit evolution in the
East African Community: The candidates for a region wide reform strategy for the financial sector. Ref:
92 CSAE Conference 2007. Accessed from https://www.academia.edu/33430863

Ajayi, M. (2005), “Banking Sector Reforms and Bank Consolidation: Conceptual Framework”,
Central Bank of Nigeria Bullion, 29(2), 2-10.

Akinyomi, O. J. (2014). Effect of Deposit Volume on Banks’ Lending Behaviour in the Nigerian
Post-Consolidation Era. International Journal Of Innovation And Scientific Research,4 (1):
21-25

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