Effect of Deposit Money Banks’ Lending Activities on the Growth of Real Sector of Nigeria’s Economy: A Disaggregated Approach 1986 – 2019

To the best of our knowledge, we presented an analysis of how the growth of Nigeria’s real sector has been affected by lending activities of deposit money banks. We examined how agricultural, industrial, and building & construction sectors of the real economy have grown owing to the fund they received from the deposit money banks moderated by the cost of fund/interest rate amidst information from 1986 to 2019. Model estimation adhered strictly to the Autoregressive Distributive Lag (ARDL) model/bound test for a long and short-run relationship. How agricultural, industrial, and building & construction sectors of the real economy have been affected by deposit money banks’ lending activities were evaluated following the approach of the granger causality test. From the result of the analysis, we concluded that deposit money banks’ lending activities have not significantly affected the growth of the real sector of the Nigerian economy. The equity investment scheme of small and medium enterprises requires that all deposit money banks operating in the country to keep 10 percent of their net income in an attempt to encourage the growth of small and medium enterprises. Although the Bankers’ Committee willingly came up with the initiative in 1999, we urge the Bankers’ Committee to review upward to let say 15 – 20 percent. This will in no small measure cause an upsurge in the output agricultural, industrial, and building & construction sectors of the real economy which are dominated by small and medium enterprises.