EFFECT OF BANK CAPITAL REFORMS ON ECONOMIC GROWTH OF NIGERIA (1986 TO 2013)

Anthony C. Nkemakolam

Abstract


This study investigates the effect of bank capital reforms on economic growth of Nigeria with annual time series data from 1986 to 2013. Econometric evidence reveals stationarity of the variables at their first differences while the Johansen co-integration approach also confirms the presence of one co-integrating relationship at one percent and five percent levels of significance. In addition, Ordinary Least Square results indicate that bank capital reforms have long run significant positive effect on economic growth of Nigeria. This implies that, bank reforms have the capacity to influence the direction of Nigerian economy. The study thus concludes that, bank capital reforms have shown to have very high explanatory influence on Nigerian economy, which indicates that banking sector reform is a veritable tool for repositioning and reorienting Nigerian economy. The study recommends among others that, Central Bank of Nigeria should establish effective mechanism and monitoring techniques to ensure that, bank capital recapitalization programmes are effectively implemented and funds raised are channelled to productive sectors of the Nigerian economy.


Keywords


Bank Reforms, Bank Capital, Economic Growth, Bank Reserves, Nigeria

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