Open Educational Resources
VOL 4 No 1: A Dynamic Analysis Of The Bank Lending Channel Of The Monetary Policy Transmission In Nigeria

This study examines the bank lending channel of monetary transmission mechanism in Nigeria during the period 2005-2016. Using Arellano-Bond GMM with annual financial reports of 16 commercial banks in Nigeria, the study explores the existence of the bank lending channel in the monetary policy transmission and checks the role of same in Nigeria. In particular, the study examines the response of commercial banks’ loan supply in Nigeria to bank specific characteristics i.e size, liquidity, capitalization and profitability. Our findings provide strong support for the existence of bank lending channel through the interaction of the reserve requirement and liquidity on the one hand and capitalization on the other hand. We therefore conclude that the liquidity and capitalization seem to play an important role in determining commercial bank loan supply. To this end, the study concludes that bank lending channel exists in Nigeria and that liquidity and capitalization matters.

BY: Onuoha, Peripaul Oluchukwu

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