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. 7 2024
DOI: 10.56201/ijefm.v9.no7.2024.pg18.45

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Demand Deposits and Economic Growth: A Time Series Evidence from Nigeria

Odimgbe Jude Chijekwu (PhD), Sampson Ikenna Ogoke, V.C Ogueze, ACA, PhD.

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Abstract

This study examined the effect of demand deposit on the growth of Nigeria economy using time series data from 1994-2019. Data were sourced from Central Banks of Nigeria Statistical Bulletin real gross domestic product was modeled as the function of Private sector demand deposit; State government demand deposit and Local government demand deposit. Ordinary Least Squares Regression was employed to reveal potential relationships between causes and effects of the independent variables on the dependent variable. The study found that 99% of changes in Real Gross Domestic Product can be explained by the independent variables. The overall significance of the model was proven by the F-statistic of 421.3616 with a p-value of 0.0000. The Durbin Watson statistic (1.718526) was within the acceptance threshold indicates that the dataset does not exhibit autocorrelation characteristic and were suitable for analysis. Findings further revealed that 68% per correction speed from the ECM period (1 year). With a p-value of 0.0.0000 for LNPSDD, the Null hypothesis of no significant relationship between LNPSDD and LNRGDP was rejected while those of LNSGDD and LNLGDD with p-values of 0.7083 and 0.7730 respectively are accepted as their p-values are higher than the Alpha value of 0.05. From the findings, the study concludes significant effect of demand deposits on Nigeria economic growth. It recommends that that government should encourage aggressive mobilization of demand deposits by financial institutions which if effectively channeled towards credit creation will increase financial sector contribution to gross domestic product.

keywords:

Demand Deposits, Economic Growth, Private Sector Deposit, State Government

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