Abstract
The low level of Capital formation in Nigeria has been blamed on the low level of savings occasioned by the low income level and high level of consumption which reduce the ability of banks to create money through intermediation. This study investigates the effect of deposit mobilization and credit financing of commercial banks on capital formation in Nigeria. Gross fixed capital formation was used as proxy for dependent variable, while credit to private sectors, lending rate and Total deposit liabilities were used as proxies of independent variables. The study employed time series quarterly data from Q1 1980 to Q4 2015, which constitutes 48 observations. Multiple regression techniques were used to analyze the data. The study found that (LRN and TDL) have positive impact on GFCF of Nigeria while credit to private sector has an inverse relationship with GDP. In view of this finding, the study recommended that Nigeria commercial banks should re-direct their intermediation activities effectively.
 JEL Classification: C22, C87, G2, G21, G29
Highlights
Deposit mobilization is one of the important functions of banking all over the world
Objectives of the Study The broad objective of this study is to examine the impact of deposit mobilization and credit financing of deposit money banks on the capital formation of Nigeria
Literature Review 6.1 Concept of capital formation Capital formation is a term used to describe the net capital accumulation during an accounting period for a particular country, and the term refers to additions of capital stock, such as equipment, tools, transportation assets Bakare (2011) defines capital formation as that which relates to the share of current saved and invested income in order to increase future output and income
Summary
Deposit mobilization is one of the important functions of banking all over the world. The relationship between the mobilization of bank deposits, the financing of bank credit and the formation of capital is through the activities of the banking industry such as mobilization of deposits and creation of credits. It has been argued in the public domain that banks have not been performing effectively to improve capital formation to guarantee a sound financial system (Venkati, 2016)
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