Effect of Deposit Money Bank Lending on the Growth of the Private Sector in Nigeria.

Abstract:

This study seeks to investigate the Effect Of Deposit Money Bank Lending On The Growth Of The Private Sector In Nigeria, Using time series data from 1995 to 2020, to achieve this objective, the study applied both descriptive statistics and regression analysis. Descriptive statistics shows that the series are normally distributed. In other to check the short run impact of the variables the study used ordinary least square model with the aids of E-views econometrics package to test the impact among the variables. It was found out that deposit money banks' lending has a positive but not significant impact on manufacturing sector gross domestic product in Nigeria.. Again, it was found out that there is positive and significant impact between total bank deposit and manufacturing sector gross domestic product in Nigeria. The coefficient of determination R2 as 0.967008 implying that the explanatory variables jointly explained over 96.7% of the total variation in the dependent variable (MGDP). Whereas, the remaining are explained in other variables not included in the model. Meanwhile the Adjusted R2 also confirms that the model has a goodness of fit. The study therefore recommends that the monetary authority (CBN) should focus on initiating and implementing policies that will regulate banks' lending rates so as to forestall unnecessarily high rates that will deter investors.