THE CONTRIBUTION OF COMMERCIAL BANK TO THE ECONOMIC GROWTH IN NIGERIA (1980 –2004)
ABSTRACT
Commercial banking in Nigeria began in the late nineteenth century, and their contribution to economic growth since then cannot be overstated. The proposition that financial institutions, particularly commercial banks, contribute significantly to economic growth is widely accepted. Financial resources are required for any country to pursue economic growth. These funds are primarily obtained from commercial banks. The purpose of commercial banks is not only to make a profit for their company, but also to make life more meaningful for society through loans and advances.
This study looked into the impact of commercial
Banks provide loans and advances. The goal is to understand their roles in the development of Nigeria’s economy.
The outcome of the
According to research, loans and advances are
Gross domestic product is positively related.
TABLE OF MATERIALS
Title page……………………………………………
Approval page……………………………………………
Dedication………………… iii
iv. Acknowledgments…………
Abstract……………… vi
Table of Contents…………………………………………
CHAPITRE ONE
1.0 INVESTIGATION
1.1 Study context………… 1
1.2 Problem statement…
1.3 Study Objectives……………………………………..
1.4 The study’s hypothesis…………
1.5 Importance of the study………………………………………
1.6 The study’s scope and limitations…
1.7 Definitions of terms……………………………………….
CHAPITRE TWO
REVIEW OF LITERATURE 2.0
2.1 Theoretical Literature………………………………………
2.2 Empirical literature………………………………………
2.3 Limitations of previous research… …. …. 40
CHAPITRE THREE
3.0 METHODOPLOGY
3.1 Theoretical Framework……………………………………..
3.2 Model Specifications……………………………………………………
3.3 Evaluating Method………… 45
3.4 Data required and source……………………………………
CHAPITRE FOUR
4.0 RESULTS PRESENTATION AND EXAMINATION
4.1 The empirical findings………………………………………
4.2 Statistical evaluations
of significance………. 48
4.3 Evaluation of working hypotheses……………………………………..
4.4 The Implications of the Findings
CHAPITRE FIVE
5.0 SYNOPSIS, CONCLUSION, AND RECOMMENDATIONS
5.1 Summary of the findings………………………………………….
5.2 Conclusion……………………………………………….
5.3 Recommendations……………………………………….
References …. … … … … … … … 56
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The term “growth” can be interpreted in a variety of ways. Regardless, the problem of economic growth was initially viewed primarily as an economic problem to be addressed primarily by economists. Low per capita income was interpreted as the massive poverty that exists in the developing world.
Growth in the late 1960s and early 1970s highlighted a situation of worsening poverty conditions for the poor in many developing countries, despite a relatively good record of national income growth.
The preceding development has raised concerns about the growth bias. As a result of these inquiries, more variables were added to the definition of economic growth. Economic growth became increasingly associated with increased rates of national income growth or
An increase in the rate of growth of per capita output, combined with a fairer and more equitable distribution of the resulting output. The latter condition, of course, implies improved employment conditions as well as increased provision of social services. Indeed, the emphasis on the conceptualization of economic growth became primarily focused on the provision of basic needs for the masses of people.
However, in the 1980s, economic growth was defined as the increase in real output or real per capital output of an economy. This implies that the standard of living of people in any economy is best measured in terms of real output per person.
Commercial position
The importance of banks to the economic growth of Nigeria and other LDCs cannot be overstated. This is demonstrated by the concerted efforts of government, policymakers, and academic economists alike; as a result, commercial banks in Nigeria have shown increased interest in economic growth and development in recent years.
Under its integrated economic growth and development program, the government has established small-scale agro-based industries and has also developed measures to encourage industries, commerce, agriculture, and other services.
The banking decree of 1969 empowers the Central Bank of Nigeria to grant approval for commercial banks to open and close branches; and the 1976 financial system review committee proposed that commercial banks should facilitate the transportation of the economy in order to promote rapid expansion. of baking facilities, services, and banking habits. There has been a noticeable modernization of banking practices, as well as mobilization of savings for investment in other areas of the economy.
1.2 STATEMENT OF THE PROBLEM.
Growth has many interconnected aspects. It entails steering society in a desired direction, such as increased physical infrastructure, morale, political development, social development, and economic growth.
Economic growth and political development are two major goals in any modern society that cannot be achieved separately. In short, they have been the major issues of any developing country, to which Nigeria belongs. Initially, improvement in national welfare was measured by the rate of growth in gross domestic product, but growth is now viewed as improvement in the general welfare of society. It is usually manifested in desirable changes in various aspects of society’s life.
Another aspect of economic growth is a decrease in the level of inflation.
Increase in per capita income, increase in employment, equitable income distribution, favorable trade and payment balance, and so on. Commercial banks, as an important institution, have contributed to the country’s economic growth. This is accomplished through the process of capitalization of financial resources, efficient allocation of these available resources, and the provision of institutional mechanisms for mobilizing and directing resources from surplus spending units to deficit spending units.
In this study, economic growth is defined as an increase in the quantity of goods and services. These goods/services are used to measure the standard of living, which has increased as the gross domestic product has increased over time. These goods and services are not created by themselves, but rather by firms or corporations. Before producing any goods or services, use resources (both human and natural). Uni-Lever, Nestle Food, Nigeria Breweries, and other companies are examples of these firms or companies. These companies or firms that produce goods and services that improve or raise our standard of living are dependent on the amount of capital they receive from this sector (commercial banks), which is the contribution of commercial banks to Nigeria’s economic growth.
1.3 OBJECTIVE OF THE STUDY
The most pressing need in contemporary Nigerian society, as in all developing societies that are integrated into the global capitalist economy, is economic growth and development. And financial institutions, particularly commercial banks, are required to achieve these goals.
The primary goal of this research is to look into how commercial banks contribute to Nigeria’s economic growth through loans and advances.
1.4 HYPOTHESIS OF THE STUDY
The following hypotheses will be proposed and scientifically tested during the course of this research.
HO: b1 = O There is no significant link between commercial and
Nigeria’s Gross Domestic Product (GDP) and bank loans and advances
H1: b1 = O There is a strong link between commercial and
Bank loans and advances in Nigeria, as well as the country’s GDP.
1.5 SIGNIFICANCE OF THE STUDY
Commercial banks’ contributions to economic growth, particularly in developing countries, are critical. This study contributes to a better understanding of the positive impact of commercial banks, particularly in Nigeria. It discusses how commercial banks in Nigeria have contributed to the achievement of economic growth.
This analysis will assist policymakers in devising a more effective method of regulating the activities of commercial banks in particular and financial institutions in general. This study aims to stimulate further research into how commercial banks’ contributions to economic growth can be increased.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
The study is intended to cover commercial bank loans and advances from 1980 to 2004. The study reflects what is available in our commercial banks to a large extent, and the data collected and used are primarily secondary data.
Due to insufficient data for 2005, the research work covered the years 1980 to 2004, but every effort was made to ensure that the study met the current demand and comprehensiveness as adequately as possible.
1.7 DEFINITIONS OF TERMS
Economic growth is defined as the percentage annual change in a country’s or group of countries’ national income. Economic growth is desirable because a growing economy means more goods and services for people to consume. It can be defined as an increase in real gross national product over time or if a country’s gross national product has become larger than before. Before we can say that growth has had a positive impact on citizens’ welfare, the rate of GDP growth must be greater than the rate of population growth (kuznet 1973). Economic growth serves as a foundation for all other aspects of economic development.
Economic Development: To assess the changes in the economy
Instead of growth, we use the concept of national welfare. Economic development is a process of increasing the general well-being of society. It is usually manifested in desirable changes in various aspects of society’s life.
Economic development includes the following components:
a) A decrease in the level of unemployment.
b) A reduction in the magnitude of personal and regional disparities.
c) A decrease in the level of absolute poverty.
d) An increase in real output of goods and services.
e) Increases in people’s social and political consciousness.
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