Branch Banking and Economic Growth in Nigeria: A Vector Autoregression Analysis
1ABIDEMI ABIOLA and 2M. O. EGBUWALO
1Department of Economics, Ajayi Crowther University, Oyo, Oyo State, Nigeria
2M. O. Egbuwalo is of the Department of Economics, Bowen University, Osun State, Nigeria
Email: abiolademis@yahoo.com
ABSTRACT
Bank performance has been identified as a function of many variables of which branch banking is one. In a country where branch banking enjoys prominence over other banking structure, one tempts to trace the mechanism through which the established branches translate to economic growth. This is the major objective of this study. The study made use of Autoregressive distributed lag bound test approach to cointegration to analyse the impact of branch banking on economic growth in Nigeria. The study concludes among others that branch banking is negatively related to economic growth. This conclusion is in tandem with macroeconomic theory that establishes the fact that savings among others constitute leakages in any given economy. The study therefore recommends that government should provide an enabling environment for transaction velocity to be on the rise. This will have an ultimate positive effect on aggregate demand and economic growth.