The impact of banking credit on economic growth and inflation: The case of Nigeria

Banking credits have been studied by many authors,and most of them have concluded that credit given by banks is necessary for economic growth and has an influence on inflation. The study aims to investigate the role of bank credit in the economic growth of Nigeria and inflation rate. Macroeconomic variables which include Domestic credit (DC), Net domestic credit (DOMCRE), Gross domestic product (GDP) and inflation were used. The data were collected from the Central Bank of Nigeria, World Bank World Development Indicators data, and the National Bureau of Statistics of Nigeria for the 1996-2014 period. In the empirical analysis at first,the variables were represented using descriptive statistics and graphics of the variables. For the econometric analysis, Granger causality test was used. Before the Granger causality test; the integration level of the variables were investigated using unit root test. The unit root test shows that all variables are first-order integrated. The result shows that GDPS is the Granger cause of Domestic Credit and Net Domestic Credit. There is no Granger causality between inflation and any other variable. Keywords: Bank Credit, Economic Growth, Inflation,Nigeria