Tajudeen Idera Abdulmajeed


This paper examined inflation rate and Deposit money banks total sectoral credit allocation in Nigeria from 1981 to 2020. It has been observed that in spite of fluctuations in inflation rate, the total amount of total sectoral credit allocation by deposit money banks have not been appropriate with sectoral needs. The study aimed at identifying a causality link between inflation rate and deposit money bank total sectoral credit allocation in the presence of structural breaks in Nigeria. The study utilized Nigeria annual time series data sourced from the Central Bank of Nigeria statistical Bulletin and Word Development Indicator from 1981-2020. The e-views statistical technique involving Augmented Dickey Fuller Unit Root conventional and structural break tests, ARDL, granger causality test, Bai-Perron’s multiple structural break procedure were employed. The finds revealed the existence of short-run relationship between inflation rate and deposit money banks sectoral credit while in the long run inflation rate has negative but non-significant impact on deposit money banks total sectoral credit allocation in Nigeria. Also Bai-Perron’s test found strong evidence of five structural breaks in the variable, with identifiable finance and economic shock in the country during the sample period. The study therefore, recommended, that monetary policy regulator should continue focusing on keeping low inflation because it would expand the volume of deposit money banks total sectoral credit but when it is high and uncertain, it erodes all economic activities and financial institution in particularly in Nigeria.


Inflation rate, banks total sectoral credit, ARDL Bound Test, Bai-Perron structural breaks, Granger causality

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