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ABSTRACT
The study examined deposit money bank operation and economic growth in Nigeria. The objectives of the study were to determine the relationship between Deposit Money Banks Credits and economic growth in Nigeria, examine the nature of relationship between Deposit Money Banks and economic growth in Nigeria, ascertain the impact of interest rate spread of Deposit Money Banks on economic growth in Nigeria, determine the level of liquidity of Deposit Money Banks on economic growth in Nigeria, and examine the impact of exchange rate on economic growth in Nigeria. The tool used to analyze the collected data and type of statistic used in testing the hypothesis, was the E-view 8.1. The theoretical and economic model as well as the estimation of their parameters on the basis of OLS method from the frame work to the content of the objective of the study, this model provides the best techniques for the verification of the reputation of the theory and also provide quantitative estimate of the magnitude relationship among variables without much subjective judgement. The independent and dependent variables can be specified and parameters subjected to various reliability test via the use of correlation judging the explanatory power of the linear regression (Durbin–Watson) estimation of the dependent variables on the independent variable. The findings from the study showed that deposit money bank credit have a significant effect on economic growth in Nigeria, deposit money bank liquidity have a negative effect on economic growth in Nigeria, interest rate has a significant effect on economic growth in Nigeria, and exchange rate have a significant effect on economic growth. The study further recommended that a comprehensive legal framework that will aid the monitoring of credit performance and recovery of debts owed to banks to encourage them to willingly lend to the economy, deposit money banks should explore better avenues to attract and retain more deposits so as to boost their capacity for lending, banks should be encouraged through appropriate incentives to lend more to the productive sector (real sector) if their impact on economic development is to be significant, a robust road map should be adopted through a collaboration between banks and the governments in tackling the near non-existence and sorry state of social infrastructure such as road networks, portable water and health care to enhance the welfare of the citizens, and policies aimed at enhancing credit allocation to businesses should be implemented by the monetary authorities to boost the productivity of Nigeria, create jobs and reduce the poverty level in Nigeria.
