Multivariate Analysis of the Impact of the Commercial Banks on the Economic Growth

Abstract

There would be no meaningful growth and development in any economy until Commercial Banks are involved in the promotion and transformation of capital formulation and productivity. This article assesses and analyses the impact of commercial Banks on Economic Growth in the multivariate way using the Ordinary Least Square Method [OLS]. The t-statistic, F- Statistic and coefficient of determination [R-Square] were used to test the Statistical criterion, Economic criterion and Measurement of the goodness-of-fit of the estimated regression model.

The investigation and result of the time series data of the period of 1970-2009 in Nigeria shows that the Commercial Banks Deposit Liability [BDL] and Lending Rate [LR] had a positive relationship with the Gross Domestic Product [GDP]. While the Number of Banks [NBKS] had a negative but insignificant relationship with the Gross Domestic Product implying that, Commercial Banks Credits, Deposit Liability and Lending Rate help in achieving the Growth and Development of a country, say Nigeria. The study concludes that, Polices aimed at increasing the capital base of the Commercial Banks should be pursued vigorously in order to increase their Loanable funds and achieve sustainable economic growth and development.

Keywords: Auto- correlation, Coefficient of Determination, Deposit Liability, Econometrics, Entrepreneur, Estimated model, Growth/ Development, Impact, Multivariate, Nascent industries,  Policies.