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. 9 NO. 4 2024
DOI: 10.56201/ijefm.v9.no4.2024.pg158.189

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Deposit Money Banks (DMBs) Credits and Economic Growth of Nigeria (2007-2022)

Mbanefo Patrick Amaechi, Ph.D and Chirah Benita Adaeze

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Abstract

This study explored the effect of Deposit Money Banks (DMBs) Credits on the economic growth of Nigeria from 2007 to 2022. The objective was to validate or question the relationship between DMBs and economic growth of Nigeria. Credits to the Oil and Gas Sector, the Manufacturing Sector, the Information and Communication Sector, and the Agricultural Sector were used as proxies for Deposit Money Banks' Credits while the Real Gross Domestic Product was used to proxy economic growth. Secondary data extracted from the Annual Report of the Nigeria Deposit Insurance Corporation (NDIC) and the Central Bank of Nigeria (CBN) Statistical Bulletin were used. The study adopted an Ex- post facto research design and the data were analyzed using the Ordinary Least Squares Method while diagnostic tests such as the Serial Correlation – Breusch-Godfrey (BG) test and heteroskedasticity test were applied to achieve the research objectives. The findings revealed that Deposit Money Banks' Credits to the Oil and Gas Sector and Manufacturing Sector have positive and insignificant effect on GDP, Deposit Money Banks' Credits to the Agricultural Sector has a positive and significant effect on GDP while Deposit Money Banks' Credits to the Information and Communication Sector has a negative and insignificant effect on GDP. In conclusion, the study emphasizes the need for detailed understanding of the intricate dynamics between credit infusion and economic growth. The study therefore recommends amongst several recommendations that the Central Bank of Nigeria (CBN) should implement robust risk management frameworks to address sector- specific risks. This includes monitoring global and local developments that can impact Credits to the oil and gas, manufacturing, information and communication, and agriculture sectors’credits. Mitigating risks will enhance the effectiveness of credits in stimulating economic growth. Furthermore, the government should develop t

keywords:

Deposit Money Banks, Credit, Economic Growth, Gross Domestic Product.

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