PurposeThis paper investigates the effect of abnormal increase in credit supply on economic growth in Nigeria after controlling for the quality of the legal system, size of central bank asset, banking sector cost efficiency and bank insolvency risk.Design/methodology/approachThe authors employ the generalised method of moments (GMM) regression methodology to estimate the effect of abnormal increase in credit supply on two measures of economic growth in Nigeria.FindingsThe abnormal increase in credit supply has a significant effect on economic growth. Abnormal increase in credit supply increases real gross domestic product (GDP) growth. The abnormal increase in credit supply decreases real GDP per capita during the global financial crisis. The abnormal increase in domestic credit to the private sector has a significant positive effect on GDP per capita when there is strong legal system quality in Nigeria. In contrast, the abnormal increase in domestic credit to the private sector has a significant negative effect on real GDP growth when there is strong legal system quality in Nigeria.Practical implicationsThe abnormal increase in credit supply is ineffective in increasing GDP per capita during crisis years. Policymakers should be cautious in pressuring financial institutions to release an abnormally large amount of credit into the economy particularly during financial crises. Rather, policymakers should encourage financial institutions to supply credit in a sustained manner – not in an abnormal manner –and in a way that supports growth.Originality/valueThe present study contributes to the literature by analysing the effect of abnormal increase in credit supply on economic growth in a developing country context.
The study investigates the relationship between financial inclusion and economic development in Nigeria between 2003 and 2020 using the human development index (HDI) and variables from banking and the capital market. A separate model was specified for each of the industries in the financial sector. The econometric techniques employed include the ADF unit root test, ARDL bounds test, and Error correction model. The summary of the findings indicates the existence of a long-run relationship between HDI and capital markets inclusion, while there is no relationship recorded between banking inclusion and HDI. Secondly, the short-run models show that there is a relationship between HDI and capital market inclusion, while there is a negative relationship between HDI and banking inclusion. The study recommends the drafting of a comprehensive financial inclusion plan in the country among others.
This study employs a mixed-methods research approach to scrutinize the varied determinants influencing the willingness of off-grid rural households in Kwara State, Nigeria, to adopt Solar Home Systems (SHS). Integrating quantitative survey data from 400 households, qualitative findings derived from semi-structured interviews, and secondary data, the research provides a robust empirical framework. Through the application of Interval Regression and Tobit models, the analysis pinpoints income and education as key positive drivers towards SHS adoption, yet reveals a contrasting gender divide. Interestingly, a high level of satisfaction with the current energy provision emerges as a stumbling block to SHS acceptance. The research further identifies a distinct trend: households located further away from the grid exhibit a heightened propensity to pay for SHS, signifying a higher value attribution to SHS in these off-grid areas. The findings underscore the need for targeted interventions that encapsulate the diverse characteristics of households to ensure successful SHS promotion. The comprehensive insights garnered from this study offer indispensable guidance for policymakers and energy providers, bolstering strategic efforts to enhance SHS uptake and ultimately contributing to Nigeria's shift towards a more sustainable energy future.
The fast development in the financial system has attracted researchers’ interest in studying its implication on the economy, though empirical evidence is highly limited on disaggregated levels. This study is undertaken to examine the impact of disaggregated financial development on the effectiveness of monetary policy in Nigeria. The study used Autoregressive Distributed Lag Model to capture the data-generating process as well as both short-run and long-run relationships. The scope of analysis ranged from 2000 quarter 1 to 2021 quarter 4 to circumvent the effect of regime changes, as the chosen time horizon represents the period of the uninterrupted civilian regime in Nigeria. The data are sourced from the Central Bank of Nigeria’s and the International Monetary Fund’s statistical databases. Moreso, quarterly frequency data are used to reflect the short-run nature of the monetary policy. The finding reveals financial market development enhances the effectiveness of monetary policy in terms of achieving both its primary and secondary objectives while financial institutions development does not. Given the findings, it is recommended that the Government together with the Central Bank of Nigeria should design policies that would enhance the efficiency of the financial market, particularly markets infrastructure and technology-based products to reduce information asymmetry and transactional costs to ease the way of doing business.
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