• Impact of Banking Sector Reforms on Economic Growth in Nigeria

    Author(s):
    Dr. Akaninyene Orok (see profile) , Stephen Ocheni, Innocent Okoi
    Date:
    2019
    Subject(s):
    Corporations--Finance, Financial Reform Association (Liverpool, England)
    Item Type:
    Article
    Tag(s):
    Financial Repression, ARDL, Interest Rate Spread
    Permanent URL:
    https://doi.org/10.17613/mxjk-fj73
    Abstract:
    The study empirically examined the impact of banking sector reforms on economic growth in Nigeria using the annual time series data for forty six years (1970-2015). The major objective of the study was to examine how banking sector reforms impact on economic growth in Nigeria. The design of the study was ex-post facto and desk research design. Data for the study were sourced from Central Bank of Nigeria (CBN) statistical bulletin and International Monetary Fund (IMF) journals. The study was based on Financial Repression Hypothesis (FRH) by Mckinnon and Shaw (1973. The data here analyzed using Johnansen cointegration test and Granger-causality test for the period 1970 – 2015. Autoregressive Distributive Lag (ARDL) test was adopted in the study. From the ARDL test results, it was found that interest rate spread (INRS) was correctly signed in the model and adequately predictive of economic growth indicator studied while other exogenous variables {exchange rate (EXR), bank capital base (BCAB) and corporate governance disclosure index (CGDI)} studied did not impact positively on gross domestic product growth in Nigeria. The ARDL bound test revealed the existence of a long-run relationship among these variables. The speed of adjustment parameter as indicated by the coefficient of the Error Correction Mechanism (ECM) was significant with appropriate negative sign. The study concluded by recommending that, the policy of deposit and lending rate should be made reasonable as smaller spread between savings and deposits rates influences efficient financial intermediation. Finally, since corporate governance disclosure is seen as an indicator of the company’s openness index, companies should always make full disclosure, thereby not withholding any relevant information to external stakeholders.
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    Published as:
    Journal article    
    Status:
    Published
    Last Updated:
    1 month ago
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