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Bank's Intermediation Role and Industrial Output in Developing Economies

Olokoyo, F. O. and Adetiloye, K. A. and Ikpefan, Ochei Ailemen (2016) Bank's Intermediation Role and Industrial Output in Developing Economies. The Social Sciences, 11 (24). pp. 5838-5844. ISSN 1818-5800

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Abstract

Nigerian banks perform their financial intermediation role in such a way that makes them rnmble to mobilise fnnds for production. Over the years, the lending rates have increased and thus hindered investors from borrowing fnnds. This has contributed to the slow process of industrialisation in the cmmtiy. The central focus of the study is to determine the role that Deposit Money Banks play in promoting industrialisation in Nigeria and how high lending rates have affected industrial output, thus slowing do\Vll the process of industrialisation. The empirical relationship between bank credit and industrial output was tested in this study using the Johansen Co-integration test. The findings revealed that there is an inelastic relationship between bank credits and industrial output in the long nm. It was also discovered that high lending rates greatly affects industrial output and thus industrialisation development. Therefore, a policy to reduce lending rates so as to foster industrialisation and thus economic growth in Nigeria was recommended. This study concludes that banks are important catalysts for industrialisation however; deposits money bank needs to perform their financial intermediation role more efficiently and effectively as no economy can achieve grovvth in the absence of adequate credit to its real sector.

Item Type: Article
Uncontrolled Keywords: Financial intermediation, industrial output, Nigerian banks, production, industrialisation
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HF Commerce
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Patricia Nwokealisi
Date Deposited: 20 Jan 2017 12:13
Last Modified: 20 Jan 2017 12:13
URI: http://eprints.covenantuniversity.edu.ng/id/eprint/7606

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