Faculty: Management Sciences
Department: Banking And Finance


Benson, Emmanuel
Adigwe P. K.
Nwakoby N. Clem


This study evaluates the effect of banking sector reforms on real sector financing in Nigeria(1986-2016) but splited into four reform clusters which include liberalization (1986-1992), Guided deregulation (1993-1998), re-liberalization and universal banking model (1999-2005) banking reforms and consolidation exercise (2006-date).The main issue with banking reforms and which prompted this study was the fact that despite the series of banking sector reforms in Nigeria there seems to be no meaningful effect on financing of real sector of the economy in Nigeria. The main objective of the study is to evaluate the effect of Banking sector reforms on real sector financing in Nigeria. The specific objectives of this study is to ascertain the effect of bank capital base, cash reserve ratio, loan-to-deposit ratio, corporate governance disclosure index for board composition, exchange rate and lending rate on real sector financing. The study is anchored on financial intermediation theory and Schumpeter's model of innovation and bank credit. Ex-post facto research design was adopted. Secondary data obtained from Central Bank of Nigeria Statistical Bulletin of various years and subjected to ADF stationarity test, Johansen co-integration test and Vector error correction mechanism were also used in the study. Variance decomposition and impulse response test was also employed to test for response of shock on the variables of study. The hypotheses were tested using p-value and t-statistics at 5% level of significance. The major findings of the study showed that liberalization reform era has impacted more on real sector financing in Nigeria. The study concludes that Banking Sector Reforms in since the adoption of structural adjustment program (SAP)has a potential contribution to the growth of the real sector credit finance in Nigeria.It therefore recommends among others that Financial liberalization should be promoted by regulatory authorities for resource mobilization since it has proved potent in this regard. The financial sector should be allowed to operate under free market operation. This will increase servings that likely improve quantum of loan to the real sector.