ABSTRACT

The Nigerian commercial bank industry has gone through various policy measures so as to achieve economic growth. Despite the use of direct monetary instrument, monetary aggregates, government fiscal deficit, GDP growth rate, inflation rate and the balance of payments position moved in undesirable directions. Hence, this study tries to investigate the impact of commercial bank deposits on economic growth in Nigeria employing certain control variables such as nominal interest rate and inflation. The study was done with the Ordinary Least Square (OLS) method and Granger Causality tests using annual data from 1981 to 2013. The study found that there is a positive relationship between commercial bank deposits and economic growth in Nigeria. The ADF unit root test showed that all the variables are stationary at first difference. More so, it was also found that there is a long run relationship between the variables of interest detected by the Johansen cointegration test and the Granger causality test. The research result supports the endogenous growth model which believes that a strong financial institution can facilitate economic growth. One of the major findings of the study is the activities of commercial banks can be used to control economic activities in Nigeria. Among the recommendation of this study, the financial institution should build a financial environment that is safe, reliable and rewarding so as to attract deposits from people