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ABSTRACT
The finding of this study depict that the role of financial intermediation on the growth rate of RGDP cannot be overemphasized. This paper aims to investigate the roles of financial intermediation on the development of the Nigerian economy and to provide quality recommendations on how these institutions can be managed to ensure economic development. This study examines empirically the relationship between domestic credit to the private sector and the growth rate of RGDP in Nigeria employing the Johansen’s Cointegration Technique and the Error Correction Model as its estimation technique. Based on the findings of this study, it was discovered that domestic credit to the private sector and interest rate does not have significant impact on growth rate of the economy in Nigeria. In light of the above findings, the government through the CBN should put in place appropriate and sound macroeconomic policies (particularly monetary) to boost the development of the money market and the capital market with a view to stimulating the growth rate of GDP in Nigeria. Also, policies and measures to improve and strengthen the development of the money market. In particular, two of the money market instruments used in this study (money supply and bank credits) should be sustained as major instruments for national economic development through appropriate monetary policy measures. To enhance financial effectiveness and efficiency, there is need for a diversified investment instruments in the capital market whereby debt and derivative instruments will assume as much prominence as ownership instruments. The significance of this study is important to both scholars and practitioners. This study is very important to scholars as it contributes to the existing literature on the subject matter by investigating especially the roles financial intermediaries play in the economy. It provides a base for scholars who intend to carry out further studies in this area of study.
