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Financial Sector Deregulation and Deposit Mobilization of Microfinance Banks in Nigeria

Stella Nathan OmuboPepple

Abstract

This study examined the effects of financial sector deregulation on deposit mobilization of microfinance banks in Nigeria. The objective was to investigate the effect of deregulated financial sector on deposit mobilization of microfinance banks in Nigeria. Time series data were sourced from Central Bank of Nigeria statistical bulletin from 1992-2023. Deposit mobilization of microfinance banks in Nigeria was proxy by percentage of savings to gross domestic products while financial sector deregulation was proxy by deregulated savings rate, deregulated lending rate, deregulated bank lending operation, and deregulated exchange rate. Multiple regressions with econometrics view statistical package were used as data analysis techniques. The analysis from the study revealed that holding the independent variables constant and deregulated financial sector to a constant zero , microfinance deposit mobilization would be at -15.75098, a unit increase in deregulated savings rate would lead to decrease in microfinance deposit mobilization by a factors of 0.36 percent, unit increase deregulated lending rate would lead to increase in microfinance deposit mobilization by 0.71 percent, while unit increase on deregulated lending operation, increased microfinance deposit mobilization by 1.7 while deregulated exchange rate lead to decrease in microfinance deposit mobilization by 1.8 percent. The study found that 51.3 percent variation on the microfinance deposit mobilization in Nigeria was explained by financial sector deregulation variables as formulated in the model. The F- statistics measures overall joint significance of both models. F statistics in model is highly significant at 5% level. From the findings, we conclude that financial sector deregulation explained moderate effect on the variation of microfinance deposits. We recommend that an enhancement of deposit rates through the banking sector and through monetary policy s

Keywords

Financial SectorDeregulationDeposit MobilizationMicrofinance Banks

References

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