Journal of Economics and Management Volume 19, No. 1 March, 2023

Macroeconomic Uncertainties and Bank Lending in Nigeria

Anthony Olugbenga Adaramola

Ekiti State University, Ado-Ekiti, Nigeria

Sunday Abiodun Obarafo

Ekiti State University, Ado-Ekiti, Nigeria

Oluwabunmi Dada

Ekiti State University, Ado-Ekiti, Nigeria

Omoruyi Fidelis Ogiamien

Ekiti State University, Ado-Ekiti, Nigeria

Abstract

For some decades, macroeconomic uncertainties have constituted a significant factor shaping the behaviour of lending among financial institutions in Nigeria. This has therefore served as a cog in the wheel of progress limiting their financial intermediation roles. Based on the foregoing, an examination into bank lending and macroeconomic uncertainties in Nigeria using secondary quarterly time series data for twenty three years (1996Q1-2018Q4) were investigated. Autoregressive distributed lag (ADRL) and Toda Yamamoto non-granger causality tests were employed. Findings from the study reveal that economic uncertainties, economic growth and macroeconomic variables have a long-run relationship with bank lending in Nigeria. The study further reveals that in the short and long run, economic uncertainties negatively affect bank lending. Again, findings reveal that economic growth exerts positive impacts on bank lending both in the short and long run. Results from the study also indicate that macroeconomic variables exert noticeable effect on bank lending. Toda Yamamoto non-granger causality result demonstrates the existence of unidirectional causal relationship running from economic uncertainties to bank lending. Based on these findings, the study recommends that it is important for monetary authority to make suitable choice of monetary policy reaction functions with vast information set and close attention so as to stabilise the macro-economy variables within the country.

Keywords：Macroeconomic Uncertainties, Bank Lending, Domestic Credit, Money Supply

JEL Classifications：E32, E51.

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