Commercial Banks Loans and Lending Rate in Nigeria: A Toda-Yamamoto Causality Approach

Abstract

This study examined the relationship between commercial banks loans and lending rate in Nigeria for the period of 1981 to 2016. The study employed the augmented Granger causality test approach developed by Toda and Yamamoto (1995). This study is motivated by the fact that commercial banks loans and lending rate is the key to development and growth of every economy through the manufacturing sector, Agricultural sector, and industrial sector. The specific objectives of the study are; to examine the causality between commercial banks loans and lending rate, to examine the causality between commercial banks loans and money supply, and to examine the causality between commercial banks loans and monetary policy rate. The objectives shall be examined using an alternative causality testing approach of Toda-Yamamoto (1995). The proposed data employed shall be from Central Bank of Nigeria statistical bulletin (2016). The results are expected to illustrate the extent to which commercial banks loans and lending rates has affected the investment sector of the economy and suggest ways of cushioning the negative effects Keywords: Commercial bank loans, Lending rate, Toda and Yamamoto causality. DOI : 10.7176/JESD/11-2-02 Publication date: January 31 st 2020