HOW CONSOLIDATION SHAPES FINANCIAL INTERMEDIATION COSTS: EVIDENCE FROM NIGERIA

This study focuses on the determinants of the cost of financial intermediation in Nigeria’s reconsolidated and post-consolidated banking sector. It sought to assess the significance of the financial intermediation cost, and to suggest measures that could enhance economic growth in Nigeria. To achieve the objective of the research, some macroeconomic indicators in the Nigerian economy, using an ex-post facto research design was applied. The data were analyzed using the Ordinary Least Square (OLS) method. From the analysis, it was revealed that there was a significant relationship between credit to the private sector and gross domestic product in Nigeria. It was further discovered that there was a significant relationship between total deposit and gross domestic product in Nigeria. Interest rate was also found to have a significant effect on gross domestic product in Nigeria. Based on the findings, the study recommended that the Nigerian government should ensure that a component analysis of the real sector of the Nigerian economy be carried out, with a view of having a better understanding of the significant relationship between the loans to the private sector and the performance of the Nigerian economy through financial intermediation. Also, the Central Bank of Nigeria should adopt interest rate policy that will always boost the savings culture of the real sector. This can be achieved by increasing the interest rate paid to deposit made by individuals, local and foreign investors.