Nexus Between Banking Industry Indicators and Economic Growth: Evidence from Nigeria

Abstract

This study was carried out to investigate the nexus between banking industry indicators and
economic growth in Nigeria. The investigation based on time series data from CBN statistical
bulletin (1980-2019) incorporated banking indicators such as: volume of capitalization (TBC);
customer deposits (VCD); credits to private sector (CPS); interest rate (INR); non-performing
loans (NPL); and volume of bank frauds (VBF) as explanatory variables against GDP which proxy
economic growth. The findings of the study revealed that: within the period under study: Volume
of Customer Deposit (VCD) and credit to private sector (CPS) has positive and significant impact
on economic growth in Nigeria while interest rate (INR); non-performing loans (NPL); and volume
of bank frauds (VBF) has negative and significant impact on economic growth in Nigeria. The
major recommendation is that operations of banking industry should be strengthened through
appropriate policy measures towards enhancing its contribution to economic growth and
development in the country. And that there should be more monitoring of banking industry
indicators especially interest rate (INR); non-performing loans (NPL); and volume of bank frauds
(VBF) so as to contribute positively to the growth of Nigerian economy.