Effect of Financial Intermediation on Economic Development of Nigeria
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2019, Vol 10, Issue 1
Abstract
This study examined the effect of financial intermediation on the development of the economy of Nigeria using data spanning 1986 to 2017. The data were obtained from Central Bank of Nigeria Statistical Bulletin, World Bank (World Development Indicators) and International Monetary Fund (World Economic Outlook). The study considered credit to private sector, lending rate and money supply and independent variables, while real GDP growth rate and unemployment rate were used as the dependent variables. Autoregressive distributed Lag (ARDL) technique was employed and Eviews 9 was used for the analysis. In other to achieve the objective of the study, series of tests were conducted, including normality test, stationarity test, cointegration test, ARDL estimation and error correction. The tests provided the basis for the conclusion that credit to private sector do not really contributes positively to the development of the economy. This could be due to high lending rate (interest rate). High lending rate is detrimental to the development of the economy. Thus, the study recommends, among others, that the monetary authority should make policies to compel banks to lower their lending rates to encourage the productive sectors of the economy to perform better.
Authors and Affiliations
Emmanuel Isaac John, Odum Augustine Nwekemezie PhD
Keywords
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- DOI 10.9790/5933-1001012332.
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