Bank Credits and Rural Development in Nigeria (1982-2009)

The paper examines the relationship between commercial bank credits indicators and rural economic growth in Nigeria. Using a double-log equation within the context of Ordinary Least Square (OLS) framework and co-integration test, the study finds that rural economic growth is co-integrated with bank credits indicators in Nigeria. Within the OLS framework, the evidence of positive relationship exist between rural economic growth and commercial bank rural loans as well as commercial bank loans to agriculture and rural economic growth at p < 0.01 in the economy, while deposits of rural dwellers were negatively impacted on rural economic growth at p < 0.01. Based on these results, the paper argues that the rate at which commercial bank credits in terms of loans and deposits of rural dwellers contributed to rural economic growth in Nigeria were very high. Therefore, these indicators of commercial bank credits in the development of economic activities in rural areas should be properly managed in order to improve the well-being of the rural dwellers which in turn improve economic growth in Nigeria.