INFLUENCE OF DEPOSIT MONEY BANK LOAN ON ECONOMIC DEVELOPMENT IN NIGERIA

Abstract

This study examined the Influence of deposit money bank loan on economic development in Nigeria. Specifically, the study investigate the effect of deposit money bank loan on interest rates in Nigeria, examine the effect of deposit money bank loan on private and public investment in Nigeria and determine the effect of deposit money bank loan on foreign direct investment in Nigeria. The study adopted ex post facto research design. The data set for this study is mainly secondary data sourced from Central Bank of Nigeria Statistical Bulletin (CBN, 2022). The data comprises annual time series spanning from 2012 through 2022. Particularly, the study employed only quantitative method of data analysis. This was done in four folds. Firstly, the descriptive analysis was performed using the correlation analysis and then mean, standard deviation minimum, maximum, skewness and Kurtosis. This was followed by unit root analysis, co-integration analysis and error correction model estimation. Since the series under review were in different order of integration as stated, bounds co-integration test as proposed by Pesaran, Shin and Smith (2001) was conducted. The summary of the findings made are: From the analysis it shows the descriptive statistics of all the variables under consideration in this study in their raw form.  The mean value of LAR is given to be #150.9617 billion with a standard deviation of 2.5923. In the same while the maximum LAR for the period covered by this study is #8.8840, the minimum value is #1.100 billion. Consequently, the average values for IRT PPI and FDI are respectively given to be -0.74652, 20.734 and 1.0300. Bounds test reveals that f-statistics value of 5.623402 is greater than Critical Value Bounds for the upper bound 1(1) at 5% level of significance, thus, there is co-integration as such there is long- run relationship. The results shows that interest rate exerts a positive and insignificant effect on deposit money bank loan in Nigeria to the tune of 3.7712(p=0.3943>0.05). In the same vein, private and public investment has a positive and significant effect on deposit money bank loan in Nigeria to the tune of 0.303797(p=0.0023<0.05). ><0.05). Also, the result shows that there is positive and significant effect of foreign direct investment on deposit money bank loan in Nigeria to the tune of 0.4668(p=0.0085<0.05). From the findings of this study, we conclude that there exist a long-run relationship between deposit money bank loan and <0.05). From the findings of this study, we conclude that there exist a long-run relationship between deposit money bank loan and Nigeria's economic development. Meaning that if there are well proper interest rate, private and public investment this will bring a positive impact to the economic development in Nigeria. It was therefore recommended that Government should strengthen institutions that are charged with the responsibility of granting loans and advances to agriculture sector because of its associated benefit not only to the banks but the economy at large.