IMPACT OF GLOBAL FINANCIAL MELTDOWN ON NIGERIA’S ECONOMY VIA BANKING SECTOR

Abstract

This study investigated impact of global financial meltdown on Nigeria’s economy via banking sector. It was an analysis of the economy of Nigeria during the post-global financial meltdown era as well analyzing the impact of post-meltdown macro-economic variables (interest rate, inflation rate, exchange rate and bank lending rate) on financial deepening in Nigeria. Time series data were collected from secondary sources including CBN Statistical Bulletins and the World Bank Reports spanning from 2006 to 2022.The study utilized e-view version 9 package to test the collated data in the developed hypotheses of the study. Augmented Dickey Fuller (ADF) test, Engle Granger test for co integration and OLS estimation technique were carried out on the time series data. The empirical results revealed that the linear combination of the variables have a residual series that is stationary at level. The OLS estimation document that there is significant and positive impact on post-meltdown inflation rate on financial deepening in Nigeria, and a significant but negative impact on post-meltdown exchange rate on financial deepening in Nigeria. Also, the results from inter-bank rates is not statistically significant in affecting financial deepening and further discovered negative impact on post-meltdown inter-bank rate and on financial deepening in Nigeria, and equally exhibited insignificant impact on post-meltdown prime lending rate on financial deepening in Nigeria. Following these findings, the study recommends among others that policy makers need to intensify institutional mechanisms aimed at providing an enabling environment for the money and capital markets that will enhance the exchange rate policy to be reviewed for the purpose of boosting banking operations while the problem of exchange rate volatility and unpredictability should be tackled to reduce its effects on banking operations and the economy at large.