Has Rural Banking Developed Rural Nigeria?

Abstract

There is problem of rural development in Nigeria because of increasing poverty in the rural areas where about 70% of the people live. Reducing poverty means increasing income. Increasing income means increasing bank loans and advances for efficient application to agricultural and industrial activities in the rural Nigeria. Social banking or rural banking in Nigeria should take the lead. Has this been done in Nigeria? This is the problem to be solved by testing the hypothesis that there is no relationship between rural banks credit and the development of rural Nigeria. Regression analysis using data between 1982 and 2006 was utilised for the study. A major finding is that the lending rate, inflation rate, food imports and the autonomous contribution are anti GDP (Agriculture) though rural banks credit is positively related to the development of rural Nigeria. The major recommendation is therefore for policy makers to ensure that the auto- factors are reduced while the rural banks loans/advances and rural bank branches are increased urgently to contribute more to rural transformation.