Assessment of the Contemporaneous Impact of COVID-19 on the Nigerian Banking Sector and Economy

AFRAG001

Assessment of the Contemporaneous Impact of COVID-19 on the Nigerian Banking Sector and Economy

Yekeen O. Abdul-Maliq Banking and Finance Department

University of Abuja Abuja – Nigeria

Tel- +2348037770262

yekeem.abdulmaliq@uniabuja.edu.ng

Abstract

This paper assesses the one-year contemporaneous impact of the COVID-19 pandemic on the Nigerian banking sector as well as on the economy at large. The study compares the averages of four years monthly data pre – COVID-19. (2016 - 2019), with the one-year monthly data of the COVID-19 year, in respect of GDP, five money supply related variables as well as two credit accommodation. Data analyses reveal that 2020 GDP value is marginally higher (0.88 percent) than its four-year pre- COVID period. Money supply M1, M2 and special intervention were higher in the COVID year than their 4-year average pre- COVID. Analyses also show that currency outside bank was 26 percent higher while demand deposit was 50 percent lower in the COVID year than their 4-year pre-COVID averages. Furthermore, Banking system credit to government and the private sector were 96 percent and 28 percent respectively higher in the COVID year than their 4-year pre-COVID year averages. Also, the E-

view results of the impact of the above variables on GDP reveal that M1, M2 and Government consumption were significant in explaining the 78 percent variation in GDP in the five years combined. The test of structural break was indeterminate. Based on the above, the study concludes that the impact of COVID-19 pandemic on the Nigerian banking system and economic has not been very disturbing. This however does not imply that the country should become complacent with COVID-19 protocol or relent on her efforts at protecting the economy against it.

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