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BANK LENDING ACTIVITIES AND ECONOMIC DEVELOPMENT IN NIGERIA; AN EMPIRICAL INVESTIGATION
Abstract
This paper examined the effect of bank lending activities on economic development in Nigeria, covering the period, 1980-2013.In models 1 and 2, human development index and the industrial gross domestic product, were employed as proxies for human development and industrial development respectively while commercial bank credit to the general commerce, production, services and other sectors formed components of bank lending activities. Applying the test for stationarity with the Ordinary Least Squuare (OLS), and Cointegration procedures, the hypothesis that there is no signficant relationship between bank lending activities and economic development was tested. The results revealed a significant relationship between bank lending activities and economic development in Nigeria. Whereas in model 1, both credit to the general commerce and production sectors were statistically significant as well as met the a priori expectation, model 2 showed that only credit to the services sector carried the wrong sign and at the same time was statistically insignificant. Study, thus concludes that the Central Bank of Nigeria needs to step up its supervisory roles to reduce incidence of insider dealings, bad credit administration and poor corporate governance among commercial banks in Nigeria.
Keywords: Bank Lending Activities Human Development Index, Industrial Development.