The Determinants of Loan and Advances in the Financial System
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Date
2007
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Faculty of Arts, Business and Science at the University of the North
Abstract
This study examined four major determinants of Loan and Advances in the Nigerian financial system that is the liquidity ratio, capital base, bank deposit and lending rate. The study covered a period of thirty seven years banking in Nigeria from 1970 to 2006. The secondary data collected from Central Bank annual reports of various years were analysed to confirm the appropriate relationship between the commercial banks' loan and advance (dependent variable) and the determinants (independent variables). A multiple regression analysis was carried out to determine the relationship between both the dependent and independent variables. While the results show that there is inverse relationship with liquidity ratio and interest rate on one hand, it confirms that there exist a positive relationship between dependent variable (i.e. loan and advance) and capital, likewise bank deposit.
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Keywords
Loan, Financial System, Nigeria, Evidence