Financial Intermediation by Banks and Economic Growth in Nigeria, 1990-2008

Abstract

This study investigated the role banks play in economic growth. It used bank deposits and bank credit to the private sector as variables for bank intermediation and real gross domestic product (RGDP) to proxy economic growth. The Regression of RGDP as dependent variable against bank deposit and credit confirmed that banks through their intermediation function contribute to economic growth in Nigeria. The paper therefore recommends that banks should be encouraged to expand credit to the private sector.