Nexus Between Deposit Money Bank Performance and Non-Oil Sector Output Growth: Experience from Nigeria and South Africa
Downloads
This study focused on investigating the nexus between deposit money bank performance and the non-oil sector nexus with emphasis on Nigeria and South Africa using the autoregressive distributed lag (ARDL) model. Some sets of annual time series data ranging from 1990 to 2020 were utilized. Performance indicators of deposit money banks like as return on assets (ROA) and return on equity (ROE) are used to capture the effects of deposit money banks on the non-oil sector. In addition, non-oil sector performance indicators such as agricultural value added (AVD), employment in agriculture (EIAG), manufacturing value added % of GDP – MVA, services value added (SVA) – a percentage of GDP, were employed as the measures of non-oil sector performance; while the control variables include interest rate (INTR) and exchange rate (EXR). In addition, the result of the long-run bound test shows that a long-run relationship also exists between deposit money bank performance and the non-oil sector. Evidence from the main findings in the ARDL results indicates that there is a positive long-run relationship between deposit money bank performance and non-oil sector performance. In the short run, the speed of adjustments from short-run to long-run for models 1 – 3 measured the speed of adjustments. The results of the country’s specific effects show that the deposit money bank has negative effects on the non-oil sector in Nigeria but has a significant of the South African non-oil sector. Thus, policies like economic diversification and enhancement of macroeconomic and institutional quality were recommended.
Alkhazaleh, A. M. K. (2017). Does banking sector performance promote economic growth? Case study of Jordanian commercial banks. Problems and Perspectives in Management, 15(2), 55‑64. https://doi.org/10.21511/ppm. 15(2).2017.05
Ali, W., Ali, W, B., & Salah, A. (2022). The relationship between bank profitability and economic growth for conventional banks in GCC countries. Journal of Smart Economic Growth, 7(2).
Banerjee, A., J. J. Dolado, J. W. Galbraith and D. F. Hendry (1993), Co-integration, Error Correction and the Econometric Analysis of Non-stationary Data, Oxford University Press, Oxford.
Barfi, R. (2020). Assessing the Impact of the Banking Sector Performance on Economic Growth: An Empirical Study of East African Countries. International Journal of Management Sciences and Business Research, 9(4).
Belkhaoui, S. (2025). Oil price fluctuations and economic growth–banking sector nexus: Modeling for MENA countries. EuroMed Journal of Business, 20(1), 216–243. https://doi.org/10.1108/EMJB-03-2023-0079
Chima, O. (2017). Focus on Nigeria’s Non-oil revenue potentials. Internet Retrieved, May 1, 2019.
Daramola, K. O. (2024). Deposit money, bank credit, and non-oil export in Nigeria. Interdisciplinary Journal of Management Sciences, 1(1), 1–9. https://doi.org/10.38140/ijms-2024.vol1.07
Dickey, D.A.I. and Fuller, W.A. (1979) Distribution of the Estimators for Autoregressive Time Series with a Unit Root. Journal of the American Statistical Association, 74, 427-431.
https://doi.org/10.1080/01621459.1979.10482531
F, F., & F, F. (2024). Examining the Relationship between Bank Profitability and Economic Growth: Insights from Central and Eastern Europe. Global Business & Finance Review, 29(1), 31‑43.
https://doi.org/10.17549/gbfr.2024.29.1.31
Ghatak, S. and Siddiki, J. (2001) The Use of ARDL Approach in Estimating Virtual Exchange Rate in India. Journal of Applied Statistics, 28, 573-583. https://doi.org/10.1080/02664760120047906
Hajara, M. M. S., & Rinosha, F. K. (2022). Impact of banking sector financial performance on economic growth in Sri Lanka. Journal of Business Economics, 04(01).
Hamdaoui, H. E., & Cancelo, M. (2024). The Influence of the Banking Sector on Economic Growth and Commodity Prices: A Panel Data Analysis of Spain, France, and Romania. Commodities, 3(2), 168‑181.
https://doi.org/10.3390/commodities3020011
Hammami, S., & Smida, M. (2022). What Is The Role Of The Banking Sector In Economic Growth? Case of Tunisian Banks. Noble International Journal of Economics and Financial Research, 7(1).
Hassan, M U., & Amin, F B. (2023). Examining the effect of banking performance on the economic growth of Saudi Arabia: A Panel ARDL Approach. Journal Of Economic Studies, 15(1).
https://doi.org/10.33948/esj-ksu-15-1-2
Hinmikalu, P. O., & Ogbonna, C. A. (2024). Analysis of the effect of non-oil export on economic growth of Nigeria. The International Journal of Research and Innovation in Social Science (IJRISS), 8(11). https://dx.doi.org/10.47772/IJRISS.2024.8110222
Ibrahim, H. M., Abdalla, M. A. A. (2020). The Impact of Banking Sector Development on Economic Growth: Evidence from Sudan. International Journal of Business Management and Economic Research, 11(3).
Johansen, S. & Juselius, K. (1990) Maximum Likelihood Estimation and Inference on Cointegration—With Applications to the Demand for Money. Oxford Bulletin of Economics and Statistics, 52, 169-210.
http://dx.doi.org/10.1111/j.1468-0084.1990.mp52002003.x
Johansen, S. (1991) Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models. Econometrica, 59, 1551-1580. http://dx.doi.org/10.2307/2938278
Kale, S., & Eken M. H. (2022). Bank Efficiency and Economic Growth in the OECD Countries. Romanian Journal of Economic Forecasting.
Ledhem, M. A., & Mekidiche, M. (2020). Economic Growth and Financial Performance of Islamic Banks: A CAMELS Approach. Islamic Economic Studies, 28(1), 47‑62.
https://doi.org/10.1108/ies-05-2020-0016
Manasseh, C. O., Logan, C. S., & Ede, K. K. (2024). The Impact of Technological Innovations on Bank Performance in Emerging Economies. Asian Journal of Economics, Business and Accounting, 24(10), 335–355. https://doi.org/10.9734/ajeba/2024/v24i101532
Manasseh, C. O., Nwakoby, I. C., Okanya, O. C., Nwonye, N. G., Odidi, O., Thaddeus, K. J., Ede, K. K., & Nzidee, W. (2024). Impact of digital financial innovation on financial system development in the Common Market for Eastern and Southern Africa (COMESA) countries. Asian Journal of Economics and Banking, 8(1), 121–142.
https://doi.org/10.1108/AJEB-04-2022-0041
Manasseh, C. O., Logan, C. S., & Ede, K. K. (2024). Achieving Sustainable Development through Non-Oil Sector Development: Is this feasible in Nigeria? Indonesian Journal of Sustainability Accounting and Management, 8(2), 388–399.
https://doi.org/10.28992/ijsam.v8i2.821
Manasseh, C. O., Ngong, C. A., Logan, C. S., Ede, K., & Okanya, O. (2025). Financial technology, innovation, and bank performance nexus: Evidence from ECOWAS member countries. Journal of African Business.
https://doi.org/10.1080/15228916.2025.2465118
Nguyen, P. T. (2022). The Impact of Banking Sector Development on Economic Growth: The Case of Vietnam’s Transitional Economy. Journal of Risk and Financial Management, 15(8), 358.
https://doi.org/10.3390/jrfm15080358
Obiora, S. C., Zeng, Y., Li, Q., Liu, H., Adjei, P. D., & Csordas, T. (2022). The effect of economic growth on banking system performance: An interregional and comparative study of Sub-Saharan Africa and developed economies. Economic Systems, 46(1), 100939.
https://doi.org/10.1016/j.ecosys.2022.100939
Okezie, S.O. & Azubike, J.U. (2016). Education of the contribution of non-oil revenue to government revenue and economic growth: Journal of Accounting and Financial Management 2(5).
Patrick, H. T., 1966, Financial development and economic growth in underdeveloped countries. Economic Development and Cultural Change, 14(2), 174-189.
Pesaran, M.H., Shin, Y. and Smith, R. (2001) Bounds Testing Approaches to the Analysis of Level Relationships. Journal of Applied Econometrics, 16, 289-326. https://doi.org/10.1002/jae.616
Phillips, P.C.B. and Perron, P. (1988) Testing for a Unit Root in Time Series Regression. Biometrika, 75, 335-346.
http://dx.doi.org/10.1093/biomet/75.2.335
Reddy, K., Mubeen, S., Raju, K. H. H., V J., & S M. B. (2023). Does the Performance of the Banking Sector Promote Economic Growth? A Time Series Analysis. International Journal of Professional Business Review, 8(6), e02128.
https://doi.org/10.26668/businessreview/2023.v8i6.2128
Topaloğlu, T. N., & Ege, İ. (2020). The Relationship between Financial Performance of Banking Sector and Economic Growth: A Research on EU Countries. Gümüşhane Üniversitesi Sosyal Bilimler Enstitüsü Elektronik Dergisi, 11(2), 508‑518.
https://doi.org/10.36362/gumus.699442
Wicksell, K., 1901, Geldzins und Güterpreise. Jena: Gustav Fischer.
Weise, C. L., 2006, A simple Wicksellian macroeconomic model. Department of Economics, Gettysburg College, Gettysburg.
Wang, X. Z., Wu, S. L., & Gao, F. (2010). The relationship between economic growth and agricultural output growth: the case of China. Paper presented at International Conference on E-Business and E-Government (ICEE), Guangzhou, China.
Zeqiraj, V., Hammoudeh, S., Iskenderoglu, O., & Tiwari, A. K. (2019). Banking sector performance and economic growth: evidence from Southeast European countries. Post-Communist Economies, 32(2), 267‑284.
Copyright (c) 2025 Kenechukwu K. Ede, Chine Sp. Logan, Deborah N. Umah, Obiageli G. Akamobi, Charles O. Manasseh
This work is licensed under a Creative Commons Attribution 4.0 International License.
All Content should be original and unpublished.
