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ABSTRACT
This study empirically examines the impact of microfinance banking on economic growth in Nigeria spanning the period of twenty three (23) years, using Error Correction Model (ECM) techniques. The study used annualized time series data spanning the period (1992 – 2014), while adopting a dynamic framework in the analysis which included subjecting data set to preliminary test and corresponding computation of descriptive statistic; preliminary test for: unit root test and co-integration test.
Preliminary analyses indicated that all the variables used were found to be I (1) and long run relationship exist between the dependent variable and all the explanatory variables. The basic analysis involved the estimation of the dynamic pattern of response of economic growth and other explanatory variables with respect to a shock in components of microfinance variables. Specifically, the empirical results show that the coefficient of microfinance variables considered have significant effect on economic growth in Nigeria both in the short and long run during the period under review.
On the basis of our findings, the major conclusion that can be inferred from the study is that Nigeria has begun to reap significant benefit of microfinance banking as its effect on economic growth in both the short and long run during the period under consideration is significant. The study further concludes that the microfinance variables of (total loans, total assets and deposit) considered in this study are significant variables in explaining economic growth in Nigeria during the period under review.
