Banking Sector Reforms and Critical Factors in Nigeria’s Economic Growth Process

Abstract

The paper investigates the impact of the banking sector reforms on the Nigerian economy using the Ordinary Least Squares (OLS) technique in assessing the data on variables from 1980 to 2012. The result showed that the minimum capital base which is at the heart of the banking sector reform has a positive and significant relationship with the level of economic growth. This is an indication that the banking sector recapitalization has been beneficial and capable of generating the desired level of economic progress in Nigeria. The result shows that the high interest rate policy has been detrimental to the level of economic progress in Nigeria. The result further revealed that the expansionary monetary policy has been crucial and critical in the development process in Nigeria. It is thus recommended amongst others that the monetary authorities should further increase the minimum capital base and there should be perpetuation of the expansionary monetary policy.

Keywords: Banking Reforms, Capitalization, Expansionary Monetary Policy, Economic Progress