Charles Chekwa, Tony Emetu, Chinonye Onwuchekwa, Chinedu Ezirim

Domestic Financial Architecture and Demand Side Intermediation Performance: Finametric Intertemporal Evidence From Nigeria

Introduction

Domestic financial architecture and demand side intermediation performance: finametric intertemporal evidence from nigeria. Finametric analysis reveals how Nigeria's domestic financial architecture (MPR, SLR, CRR) affects bank demand-side intermediation performance. Get policy insights for monetary authorities.

Abstract

This study aimed at unveiling the effects of the bank-based domestic architectural prescription on the demand side intermediation performance of banks in Nigeria. Finametric intertemporal long- and short-run modelling and estimations were made using the Johansen and Jusellius approach to cointegration, error-correction parameter estimation, and the VAR-Granger-causality/block-exogeneity-Wald tests. These were applied against quarterly data from 2010Q1 to 2022Q4. Results reveal that the architectural variables of MPR, SLR, and CRR jointly caused variations in the RCG demand side financial intermediation Performance of banks, both in the long- and short-runs. Individually, MPR negatively but strongly cause significant changes in the RCG performance, in both runs. SLR strongly and positively cause variations in RCG, in both runs. The CRR negatively, but does not affect RCG, in both runs. Policy options would include the systematic and carefully-timed reduction of the MPR (thereby, encouraging banks’ access to the discount window). Secondly, systematic and well-timed increase in the SLR would be a concerted policy alternative to the monetary authorities.

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