IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH (IJSSMR )

E-ISSN 2545-5303
P-ISSN 2695-2203
VOL. 10 NO. 10 2024
DOI: 10.56201/ijssmr.v10.no10.2024.pg.316.342

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Estimated Effect of Currency Outside Bank, Demand Deposit, Savings Deposit, Time Deposit, Foreign Currency Deposit and Economic Growth in Nigeria

Odimgbe Jude Chijekwu (PhD), Ejitagha Stephen Eguonor

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Abstract

This study focused the effect of currency outside bank, demand deposit, savings deposit, time deposit, foreign currency deposit and economic growth in Nigeria. Data were sourced from central banks of Nigeria statistical bulletin from 1994 to 2012. Real gross domestic product was modeled as the function of currency outside bank, demand deposit, savings deposit, time deposit, and foreign currency. Ordinary Least Squares Regression was employed to reveal potential relationships between causes and effects of the independent variables on the dependent variable. The result shows that 83% of the variations in the dependent variable can be attributed to the variations in the explanatory variables. Furthermore, short run disequilibrium in the model is corrected annually to attain long run equilibrium with an adjustment speed of 21.32%. However, on the two-period lag of LNRGDP, LNCOB and LNTD, one-period lag of LNDD as well as LNFCD have significant effects on RGDP at 5% level of significance. It recommends that the Central Bank of Nigeria should encourage economic growth through appropriate control of currency in circulation outside banking system. This could be achieved by increasing charges on cash withdrawal and reducing charges on electronic transaction to discourage cash carriers; with this, cost of carrying cash such as natural disaster and robbery on individual that made CIC not to predict economic growth very well, could be minimized if not eliminated. The Central Bank of Nigeria should provide level ground for the non-banking consumers and businesses to have a bank account so that they can be active in saving and time deposits. This can be achieved through financial inclusion; some barriers that made many Nigerians not to have bank account should be removed. There should be appropriate supply of money into the economic stream so as to curb inflation in the system; this should be done through proper estimation of the currency

keywords:

Currency Outside Bank, Demand Deposit, Savings Deposit, Time Deposit, Foreign

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