MACROECONOMC DETERMINANTS OF BANKING SECTOR DEVELOPMENT IN NIGERIA

The study examined the macroeconomic determinants of banking sector development in Nigeria over the period 2000 to 2023. The specific objectives of the study were to examine whether exchange rate (EXRT), inflation rate (INFL),money supply (M2), interest rate (INTR), and real gross domestic product (RGDP) significantly affect banking sector development. The ordinary least square econometric technique was utilized in the analysis of data. The results from the analysis revealed exchange rate (EXRT) has significant negative effect on banking sector development (BSD) in Nigeria; money supply (M2) had a significant positive impact on banking sector development; while inflation rate (INFL) had a weak positive effect, real gross domestic product (RGDP) had a weak negative effect on banking sector development in Nigeria. The study therefore conclude that these variables should not be ignored by the Nigerian government and policy makers. They must place special attention on them in order to constantly sustain the current development of the Nigerian banking sector. The study recommends among others that, the government sand indeed monetary authority should formulate appropriate investment policy that will encourage investors to invest more in the economy. This can be achieved by lower the current high level of interest rate or banks’ lending rate in the country. By so doing, more people will be able to access loans for onward investment in the economy, and thereby boost the general economic activities in the country.