Basel Capital Channel and Lending Behavior of Banking Institutions in Nigeria: An Empirical Investigation

Dumini Solomon Igbanibo

Asian Journal of Social Sciences and Management Studies, 2020, vol. 7, issue 2, 124-134

Abstract: This study is on the role of bank capital on bank lending behavior and other macroeconomic variables. This study examined empirically Basel I Capital (Tier 1 + Tier 2), Basel II Capital (Total capital requirement), Basel III Capital (Conservation Buffer (CSB) + Counter-Cyclical Buffer (CCB)) and lending behavior of banking institutions in Nigeria. This study is time series in nature and data relating to the study were obtained from Nigerian stock exchange fact sheet and CBN statistical bulletin for the period 1986 through 2019. The analyses of the data were done using descriptive statistical tools and econometric technique of Autoregressive Distributed Lag (ardl), and granger causality test. The results indicate that there is a positive and significant relationship between Basel capital and lending behavior of banking institutions in Nigeria. Also the results show that there is a bi-directional causality between Basel capital and lending behavior in Nigeria. As such we conclude that Basel capital influences growth in credit to the private sector (CPS) and growth in credit to small and medium enterprises (SMEs) in Nigeria.

Keywords: Basel I; Basel II; Basel III; Conservation buffer; Counter-Cyclical buffer; Capital channel; Lending behavior; Banking. (search for similar items in EconPapers)
Date: 2020
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