Sectoral Distribution of Deposit Money Banks' Credits and Economic Growth in Nigeria

Abstract

Sequel to the uneven growth and development in the various sectors in Nigeria, this study seeks to examine the effect of Deposit Money Banks (DMBs) credits to various sectors on the economic growth in Nigeria within the periods of 1985 – 2014. The annual data was sourced from CBN statistical bulletin. The study adopted rigorous empirical analysis to analyse the data using Unit root test, Co-integration, Ordinary Least Squares and Error Correction Model. Result from the analysis reveal that Deposit money banks credits to both agricultural sector and manufacturing industry exhibited a positive relationship with Real GDP. While Deposit money banks credit to commerce and trade show an inverse relationship with Real GDP. We therefore recommend that the relevant authorities that influence the DMBs credits to various sectors should endeavour to improve the even distribution and effective channelling of the credits. Also savers confidence should be well guaranteed through effective intervention in the case of a distressed bank and creation of regular checks to reduce anomalies within Deposit Money Banks operation. Finally, policies that will revive the declining sectors in Nigeria should be pursued by the relevant authorities through establishment of infrastructures that will propel the effective and efficient operation of the sectors.