Impact of Financial Intermediation on Economic Growth in Nigeria

Abstract

This study analyzed the effect of financial intermediation on Nigeria's economic growth. It employed commercial banks’ sectoral credit and total deposits as proxies for financial intermediation and real gross domestic product (RGDP) as the proxy for economic growth. Secondary data from 1999–2024 were obtained from the Central Bank of Nigeria Statistical Bulletin. The Ordinary Least Squares (OLS) regression method was used for analysis, alongside an ex post facto research design. Results indicate that commercial banks’ sectoral credit has a negative, insignificant effect on economic growth, whereas total deposits have a positive, significant effect. The study concludes that deposit mobilization is vital for economic growth in Nigeria and recommends bolstering financial sector reforms, improving credit allocation oversight, and broadening digital banking infrastructure for more effective financial intermediation.