EMPIRICAL STUDY OF INSTITUTIONAL QUALITIES OF BANK LENDING BEHAVIOR IN NIGERIA
Abstract
ABSTRACT
This study is on Commercial banks whose major duty are to move financial resources from surplus unit to deficit unit to facilitate the economic activities in Nigeria Literature has revealed that the lending activities of commercial banks in Nigeria are limited due to weak institutional quality which is peculiar to developing economies. Therefore, this study aimed at examining the institutional quality on bank lending behaviour in Nigeria. The objectives of this study were to: (i) examine the effects of regulatory quality index on bank lending behaviour in Nigeria; (ii) investigate the effect of rule of law on bank lending behaviour in nigerie (iii) investigate the effectiveness of control of corruption and institutional integrity shaping bank lending behaviour in Nigeria, and (iv) investigate how microeconomic policies effect bank lending patterns in Nigeria and (v) investigate the interactive effect of institutional quality and microeconomic policies of bank lending patterns in Nigeria Secondary data obtained from World Development Indicators and World Governance Indicators between 1996 and 2023 was used for the study. The Generalized method of moments (GMM) model was employed as the estimation technique. Findings were that: (i) regulatory quality index with (B = 0.083; p- value = 0.000); rule of law with (B = 0.211; p-value = 0.000); and control of corruption and institutional integrity with (B = 0.001; p-value = 0.000) have significant and positive effects on bank lending behaviour in Nigeria While microeconomic policies with (B = -0.135; p-value = 0.513) has a negative insignificant effect on bank lending behaviour, and (iii) interactive term (institutional quality and microeconomic policies) with (B = -0.530; p-value = 0.09) has a negative significant effect on bank lending behaviour. The study concluded that macroeconomic factors and institutional quality affect bank lending behaviour in Nigeria Therefore, the study recommended that relevant regulatory authorities should improve on both monetary and fiscal policies targeted at creating a more stable macroeconomic and efficient institutional environment to support an improved lending behaviour in Nigeria
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