Assessment of Deposit Money Banks Credit, Banking Sector Depth and Economic Growth in Nigeria: An Econometric Investigation 1987-2024
DOI:
https://doi.org/10.64348/zije.2026356Abstract
This study investigates how deposit money banks' credit and the banking sector's depth affect Nigeria's economic growth. Despite reforms, Nigeria struggles to turn financial expansion into sustained economic growth. Using a causal design and the ARDL model, the study finds significant short- and long-term effects of banking sector depth proxies on GDP. Results show banking sector's financial depth boosts growth; deposit money banks' credit and deposit liabilities positively impact GDP, highlighting banking's role in mobilising deposits and credit. However, the negative private credit-to-GDP ratio suggests private credit is directed to less productive sectors. The study recommends focusing on productive sector credit, improving financial inclusion, optimising interest rates, and strengthening banking stability. Effective reforms and robust financial intermediation are essential for Nigeria's sustainable growth.
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