Do Banking Sector Reforms Drive Economic Growth in Nigeria
International Journal of Business and Economics Research
Volume 8, Issue 5, October 2019, Pages: 273-285
Received: May 26, 2019; Accepted: Jul. 10, 2019; Published: Aug. 12, 2019
Views 61      Downloads 25
Author
Ikubor Ofili Jude, Department of Economics, Ambrose Alli University, Ekpoma, Nigeria
Article Tools
Follow on us
Abstract
Banking sector reforms is the deliberate policy measures adopted by the monetary authority to promote the safety, soundness, reliability and stability of the sector, in order to be able to deliver the expected goods by improving the economy. It is against this background the investigates that impact of bank sector reforms on Nigeria’s economics growth for the period which spanned from 1970 to 2014 using ARDL analysis. The period study was disaggregated into pre bank reforms period (1970-1985), reforms period (1986-2014) and pool period (1970-2014). Real Gross domestic product (GDP) was used as a proxy for economic growth regressed on some bank performance variables such as ratio of narrow money to broad money, loan deposit ratio, commercial bank credit to the private sector, cash reserve ratio and interest rate. The study found that the bank reformed has not impacted on the growth of the Nigerian economy. The study recommend that the government should ensure strict regulatory measures through the use of its monetary policies to regulate the banking sector and the Central Bank of Nigeria should continue with its banking sector reforms and encourage substantial credit allocation to the prioritized private sector.
Keywords
Bank Reform, GDP, Loan Deposit Ratio, Credit to Private Sector, Cash Reserve Ratio
To cite this article
Ikubor Ofili Jude, Do Banking Sector Reforms Drive Economic Growth in Nigeria, International Journal of Business and Economics Research. Vol. 8, No. 5, 2019, pp. 273-285. doi: 10.11648/j.ijber.20190805.14
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
[1]
Darrat, A. F., Chopin, M. C., & Lobo, B. J. (2005). Money and macroeconomic performance: revisiting divisia money. Review of Financial Economics, 14 (2), 93-101.
[2]
Adeleye, N., Osabuohien, E., Bowale, E., Matthew, O., & Oduntan, E. (2018). Financial reforms and credit growth in Nigeria: empirical insights from ARDL and ECM techniques. International Review of Applied Economics, 32 (6), 807-820.
[3]
Todaro, M. P., & Smith, S. C. (2009). Economic development. Edinburgh Gate, HarlowEngland: Pearson Education Limited.
[4]
Ikeora, J. J. E. P., Igbodika, M. N. P., & Andabai, P. W. (2016). Banking sector reforms and the performance of Nigerian economy: A vector error correction investigation (VECM). European Journal of Research and Reflection in Management Sciences, 4 (2).
[5]
Nzotta, S. M. (2014). Money, Banking and Finance: Theory and Practice. Revised Edition, Hudson-jude. Owerri.
[6]
Soludo, C. C. (2004). Consolidating the Nigerian banking industry to meet the development challenges of the 21st century. In Being an address delivered to the Special Meeting of the Bankers’ Committee, held on July (6).
[7]
Mbaeri, C. C., & Adioha, N. (2015). Bank reform and economic growth In Nigeria. International Journal for Innovation Education and Research, 3 (5).
[8]
Ningi, S. I., & Dutse, A. Y. (2008). Impact of bank consolidation strategy on the Nigerian economy. African Economic and Business Review, 6 (2), 26-45.
[9]
Okpara, G. C. (2011). Bank reforms and the performance of the Nigerian banking sector: An empirical analysis. International Journal of Current Research, 2 (1), 142-153.
[10]
Somoye, R. O. C. (2008). The performances of commercial banks in post-consolidation period in Nigeria: An empirical review. European Journal of Economics, Finance and Administrative Sciences, 14 (14), 62-73.
[11]
CBN (2014). Statistical Bulletin. Central Bank of Nigeria.
[12]
Dele, C. A. (2007). Principles of Finance, Lagos, Page Publishers.
[13]
Fadare, S. O. (2010). Recent banking sector reforms and economic growth in Nigeria. Middle Eastern Finance and Economics, 8 (8), 146-160.
[14]
Essien, A. (2012). An Assessment of the Impacts of Banking Sector Reforms in Nigeria. Available at SSRN 2189820.
[15]
Azeez, B. A., & Oke, M. O. (2012). A Time Series Analysis on the Effect of Banking Reforms on Nigeria’s Economic Growth. International Journ. Econ. Res, 3 (4), 26-37.
[16]
Abiodun, E. & Oriavwote, V. E (2014). An Empirical Assessment of Banking Sector Reform and Unemployment in Nigeria, International Journal of Business, Humanities and Technology, 4 (1), 107-125.
[17]
Ogunsakin, S. (2014), Nigerian financial sector and manufacturing industries. Journal of Applied Chemistry, 7 (3), 41-46.
[18]
Gardener, E. P., & Molyneux, P. (Eds.). (1990). Changes in western European banking (Vol. 6). Taylor & Francis.
[19]
Ogbunuka, U. M. (2005). Banking Sector Reforms and Bank Consolidation: The Experience of Turkey. CBN Bullion, 29 (2).
[20]
Ajayi, M. (2005). Banking sector reforms and bank consolidation: Conceptual framework. CBN bullion, 29 (2), 2-10.
[21]
Ebong, B. B. (2006). Banking sector reforms: Opportunities and challenges. Union Digest–An Economic and Business Publication of Union Bank of Nigeria Plc, 10 (1), 1-9.
[22]
Deccan, H. (2004). New Banking reforms to focus on Consolidation. New Delhi: DHNs.
[23]
Idowu, E. (2014). Is Increasing Bank Capital the Solution to Improving Bank Liquidity and Preventing Bank Distress in Nigeria?. Universal Journal of Applied Science, 2 (4), 83-91.
[24]
Magbagbeola, N. O. (2004). Theoretical and Conceptual Issues in Economic Reforms. Paper presented at the 2004 CBN Executive Policy Seminar.
[25]
Aurangzeb, K. A. (2012). Contributions of banking sector in economic growth: A case of Pakistan. Economics and Finance Review, 2 (6), 45-54.
[26]
Uzomba, P. C., Chukwu, S. N., Jumbo, G. A. and Nwankwo, N. U. (2014). An Inquiring into the Impact of Deposit Money Banks’ Loans/Advances on Agricultural Sector in Nigeria; 1980 – 2011. International Review of Social Sciences and Humanities, 7 (2), 130-139.
[27]
Tella, A. (2006) Financial Sector Reforms and Management of Financial Institutions in Nigeria: Challenges and Prospects. 1st International Conference 15th – 17th March 2006 Olabisi Onabanjo University Ago-Iwoye Ogun State Nigeria.
[28]
Akingunola R. O. & Adegoke J. F. (2006) Bank Recapitalization and Merger as a Financial Reform Strategy for Sustainable Economic Growth in Nigeria. 1st International Conference 15th – 17th March 2006 Olabisi Onabanjo University Ago-Iwoye Ogun State Nigeria.
[29]
Tressel, T., & Detragiache, E. (2008). Do financial sector reforms lead to financial development? Evidence from a new dataset (No. 2008-2265). International Monetary Fund.
[30]
Adelegan, A. E., & Oriavwote, V. (2014). An Empirical Analysis of Nigeria’s Experience with Banking Sector Reforms, International Journal of Economics, Business and Finance, 2 (1), 1-12.
[31]
Bernard, A., & Michael, C. O. (2014). Nigerian bank recapitalisation reforms: Effect on the banks and the economy (2000–2012). Int. J. Manag. Stud. Res, 2 (2), 48-56.
[32]
Akpansung, A. O., & Gidigbi, M. O. (2014). Recent Banking Reforms in Nigeria: Implications on Sectoral Credit Allocation and Economic Growth, International Journal of Business and Social Science, 5 (3): 91-104.
[33]
Ehikioya, I., & Mohammed, I. (2013). Commercial bank credit accessibility and sectoral output performance in a deregulated financial market economy: empirical evidence from Nigeria. Journal of Finance and Bank Management, 1 (2), 36-59.
[34]
Iwedi, M., Igbanibo, D. S., & Onuegbu, O. (2015). Bank domestic credits and economic growth nexus in Nigeria (1980–2013). Int J Finance Accounting, 4 (5), 236-244.
[35]
McKinnon, T. I. (1973). Money and capital in economic development. Brookings Institution Press.
[36]
Shaw, E. S. (1973). Financial deepening in economic development.
[37]
Orok-Duke, O. E., Ekott, G. A., & Edu, B. E. (2009). Critical Review of Financial Sector Reforms and Financial Liberalization in Developing Countries [A Practical Discussion in Nigerian Context]. Available at SSRN 1483477.
[38]
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of applied econometrics, 16 (3), 289-326.
[39]
Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration—with applications to the demand for money. Oxford Bulletin of Economics and statistics, 52 (2), 169-210.
[40]
Harris, R., & Sollis, R. (2003). Applied time series modelling and forecasting.
ADDRESS
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
U.S.A.
Tel: (001)347-983-5186