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FINANCIAL SECTOR REFORMS AND ECONOMIC GROWTH IN NIGERIA
A b s trac t
Financial Sector reforms refers to the process or change in the components of the financial sector (i.e Deposit Money Banks, stock markets other financial intermediaries and a central bank) becoming more efficient in providing financial services. The study examines the effect of financial sector reform on Economic Growth in Nigeria over the period of 27 year (1986-2012); data were sourced from the Central Bank of Nigeria Statistical Bulletin and annual reports of Banks. The objective of the study includes; determ ining the impact of INR (interest rate) on economic growth, to examine the impact of the DMB’SCC (Deposit money banks credit claims) on GDP; to examine whether the TDDMB’S (Total deposit of deposit money banks) has an impact on economic growth or performance. The data comprises of time- series and cross sectional data which were pooled into a panel data set and estimated using linear regression model techniques. The result shows that there is a positive relationship between Deposit money bank credit claims and economic growth in Nigeria. Interest Rate (INRT), and Deposit Money Banks credit claim s (DM BCC) conform to apriority expectations. This indicates that credit claim s of Deposit money banks affects economic growth in positive way while interest rate charge by Banks for lending has negative relationship with economic growth. An increase in loan and
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advances increases economic growth through interest income generated from loan and advance. Based on our findings, it is recommended that management of banks in Nigeria should enhance their capacity in credit analysis and loan adm inistration.
Keywords: Financial Sector Reforms, Bank Credit Claims, Deposit Money Bank, Interest Rate, Total Deposit, Econom ic G rowth