Financial Intermediaries and Economic Growth: The Nigerian Evidence
Financial Intermediaries and Economic Growth: The Nigerian Evidence

Summary/Abstract: This study seeks to examine the role of financial intermediaries and to find out whether financial intermediaries impact on economic growth in Nigeria. The study adopts the Harrod-Domargrowth model which states that economic growth will proceed at the rate which society can mobilize domestic savings resources coupled with the productivity of the investment. The study employed the use of secondary data for the period 1981 to 2011 which were sourced from the CBN statistical bulletin. Nigerian banks being the dominant financial intermediaries, loans credits and advances from banks were used as proxy for the independent variable. Gross domestic product (GDP) was used as proxy for economic growth. Using the technique of correlation analysis in determining the association between loan credits and advances, and the GDP, the study reveals a relatively high positive correlation between financial intermediaries and economic growth in the Nigerian economy. The study recommends that Nigerian banks should lend higher proportion of their loan able funds to small and medium enterprises (SMEs) and should invest in information technology and human capital.

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