Determinants of Commercial Bank Lending Policy in Nigeria: An Econometric Approach

  • Lucky E. Ujuju, Lyndon M. Etale
Cite this:
Lyndon M. Etale, L. E. U. (2016). Determinants of Commercial Bank Lending Policy in Nigeria: An Econometric Approach. Innovative Journal of Business and Management, 5(04), 89–93. https://doi.org/10.15520/ijbm.vol5.iss4.54.pp89-93
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Abstract

This study examined the relationship between macroeconomic variables dynamics (such as gross domestic product, prime lending rate, exchange rate and consumer price index) and commercial bank lending in Nigeria. Time series data on the study variables were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin for the period 1985 – 2014. The study employed Ordinary Least Squares (OLS) technique to analyze data. The study found that gross domestic product, exchange rate and consumer price Index had positive correlation with commercial bank lending in Nigeria. While prime lending rate had negative relationship with commercial bank lending in Nigeria. The study recommended a policy shift towards infrastructural development and an increased productive base of the notion in order to improve the financial sector performance by stabilizing the macroeconomic variables. This it is hoped would not only help in enhancing the profitability of banks in the country but would also improve the standard of living of the Nigerian people.

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