The Operation of Commercial Banks in Nigeria started lately in 19^th century and since then their contribution to the economic growth cannot be over emphasized. There is strong acceptance of the proposition that financial institutions and particularly the commercial banks contribute significantly to economic growth. For any country to pursue economic growth, therefore financial resources cannot be avoided. These financial resources are gotten mainly from commercial banks. This essence of commercial banks is not only to make profit for their business but also to make life meaningful to the society through their loans and advances.

This research work examined the contribution of Commercial

Banks loans and advances. The aim is to know their quotas in the development of Nigeria economic growth.

The result from the research showed that loans and advances are

Positively related with gross domestic product.

Title page … … … … … … … i

Approval page … … … … … … ii

Dedication … … … … … … … iii

Acknowledgements … … … … … iv

Abstract … … … … … … … vi

Table of contents … … … … … … vii

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the study … … … … … 1

1.2 Statement of the problem … … … … 3

1.3 Objectives of the study …. … … … … 5

1.4 Hypothesis of the study … … … … … 5

1.5 Significance of the study … … … … … 6

1.6 Scope and limitations of the study … … … 7

1.7 Definitions of terms …. … … … … 7

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 Theoretical Literature … … … … … 11

2.2 Empirical literature … … … … … 35

2.3 Limitations of the previous studies … …. …. 40

CHAPTER THREE

3.0 METHODOLOGY

3.1 Theoretical Framework …. … … … 41

3.2 Model specification …. …. … … … 44

3.3 Method of evaluation … … … … … 45

3.4 Data required and source… … … … … 46

CHAPTER FOUR

4.0 PRESENTATION AND ANALYSIS OF RESULTS

4.1 The empirical results … … … … … 47

4.2 Statistical tests of significance …. … … 48

4.3 Evaluation of the working hypotheses …. … .50

4.4 Implications of the results

CHAPTER FIVE

5.0 SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of the findings …. … … … … … 52

5.2 Conclusion …. … … … … … … … 53

5.3 Recommendations … …. … … … … … 54

References …. … … … … … … … 56

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

There are quite a number of interpretations on the term growth. Be it as it may, the problem of economic growth was initially seen largely as an economic problem to be tackled largely by economists. The massive poverty that exist in underdeveloped world was interpreted as low per capita income.

Growth in the late 1960s and early 1970s brought into focus a situation of worsening poverty conditions for the poor in many underdeveloped countries despite a fairly good record of growth in national income.

The foregoing development gave rise to increasing questioning of the growth-bias. Arising from these questions, more variables were introduced into the definition of economic growth. Economic growth increasingly took on the conceptions of enhanced rate of growth of national income or increase in the rate of growth of per capita output coupled with a fairer and more equitable distribution of the resulting output. The latter condition of course implies improving conditions of employment as well as increased provision of social services. Indeed the stress on the conceptualisation of economic growth became focused primarily on the provision of basic needs for the masses of the people.

However, the wider interpretation of the concept economic growth emerged in 1978s when economic growth was defined or refers to as the increase in real output or real per capital output of an economy. This implies that the standard of living of the people in any economy is best measured in terms of real output per person.

The position of commercial banks to economic growth of Nigeria and other less developed countries (LDC) cannot be over emphasised. This is manifested by concerted efforts of government, policy makers and academic economists alike; hence in recent years in Nigeria, the commercial banks have shown greater interest for economic growth and development.

The government under its integrated economic growth and development programme has established small scale; agro based industries and has also developed certain measures aimed at encouraging industries, commerce, agriculture and other services.

The banking decree of 1969 empowers the central bank of Nigeria to grant approval for the open and closing of branches by commercial banks; and 1976 financial system review committee proposed that commercial banks should facilitate the transportation of economy of promoting the rapid expansion of baking facilities, services and cultivate banking habits. There has been glaring modernization of banking habits, mobilization of saving for investment in other areas of the economy.