Abstract
The impact of Deposit Money Banks’ (DMB) lending rate on Economic Growth in Nigeria was examined in this study. Time series secondary data on deposit money banks’ lending rate, Gross Domestic Product, and loans and advances spanning between the period 1986-2022 were collated from the Central Bank of Nigeria’s (CBN) Statistical Bulletin and used to run a regression using the Auto-regressive Lag Technique. The other instrumentality adopted in the study included among others; Augmented Dickey-Fuller, Error Correction Mechanism, and Cusum of Squares. The coefficient of Deposit Money Banks’ lending rate (-2.6132) shows that a negative and insignificant relationship at a 5% level of significance exists between Deposit Money Banks’ lending rate and Gross Domestic Product (GDP). The coefficient of total loans and advances (-0.1614) shows that a negative and insignificant relationship at a 5% level of significance exists between Economic Growth and the lending rate in Nigeria. It was discovered that Deposit Money Banks’ lending standards which discriminate between firms based on the credit risk of the various sectors of the economy thereby leading to the under-performance of Deposit Money Banks’ loans and advances. The study recommends among other things that; Government should implement appropriate policies that will change Banks’ lending behaviour that discriminates between firms based on the credit risk and encourage lending standards that will ensure that funds get to the production sector rather than unproductive ventures and individual pockets.
Keywords: Economic Growth, Gross Domestic Product, Error Correction, Mechanism, Deposit Money Banks, Lending Rate
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author/N.D. Ahmad et al
journal/Zamfara IJOH Vol. 1 Issue 3
pdf-https://drive.google.com/file/d/1kQUqagTBHwyMnw3fGnh05QpIbTXEraYQ/view?usp=share_link
paper-https://drive.google.com/file/d/1kQUqagTBHwyMnw3fGnh05QpIbTXEraYQ/view?usp=share_link
