The Role and Impact of the Banking Industry on the Nigerian Economy: An Outlook to Year 2030

Rex Oforitse ARUOFOR; Ph.D; Daniel Risiagbon OGBEIDE; Ph.D

doi:10.56201/ijbfr.v10.no8.2024.pg127.150

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The Role and Impact of the Banking Industry on the Nigerian Economy: An Outlook to Year 2030

Rex Oforitse ARUOFOR, Ph.D, Daniel Risiagbon OGBEIDE, Ph.D

Abstract

The banking industry in Nigeria has undergone many developmental changes and reforms since independence in 1960. As at 2022, there were 5442 banks and their branches in Nigeria. Some studies have been carried out on the impact of the banking industry or sector on growth of the Nigerian economy but these have been limited to the use of partial models and the results have been very limited. The banking sector is crucial to the modern economy as the primary supplier of credit. Maintaining a sound financial system is a key success factor to any country yearning for economic growth and development. In view of the important role of Banks, it is expedient to analyze their impact, dynamics and their outlook in the short term. Therefore, this study uses the total differential systems modeling approach (ecostatometrics) to evaluate the impact of banks and their branches and their distribution between urban and rural areas on the Nigerian economy as a whole in order to determine how effective banks are performing their roles in Nigeria and the constraints on one hand, and to apply Markov Chains Analysis to reveal the transition matrix of banks and their branches in Nigerian States in order to analyze their dynamics, on the other. The result indicated that the impact of bank and their branches on the Nigerian economy especially in the urban areas, is very positive but regrettably, the impact of banks on corruption is very profound causing it to increase by N2,698.9 million per annum and N2,699.8 million per annum in the new democracy. This must be the result of sharp practices among bank personnel that still need to be curbed. Some recommendations geared towards maximizing the impact of banks and their branches in Nigeria were posited. The details are contained in the article.

Keywords

Banks and their branchesTotal differential systems modeling approachMarkov

References

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The Role and Impact of the Banking Industry on the Nigerian Economy: An Outlook to Year 2030

Abstract

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