Empirical Analysis of Holistic Activities of Microfinance Banks in Nigeria

This study examines the empirical impact of microfinance banks’ activities (1981-2015). Data were collected for both the dependent variable and the independent variables. The dependent Variable is economic growth (Gross Domestic Product). The independent variables are Assets of microfinance Banks in Nigeria, Deposit Liabilities of Microfinance Banks in Nigeria and Loans and Advances of Microfinance. Secondary data were sourced from Central Bank of Nigeria Statistical Bulletin, 2015.. The data comprises of time series and cross sectional data which were pooled into a panel data set and estimated using Ordinary Least Square method of multiple regression. The result shows that there is a positive relationship between microfinance Banks Total Assets and economic growth in Nigeria. Also, Microfinance bank Loans and Advances impact positively on economic growth in Nigeria. .While, Deposit liabilities of Microfinance banks impacted negatively on economic growth in Nigeria within the period under review. It is recommended that the government should create an enabling environment capable of supporting the expansion and microfinance banks in microcredit delivery. Besides, Central bank of Nigeria through its regulatory framework should increase the asset base of microfinance institutions. Also, minimum capital requirement for Microfinance bank should be reviewed from time to time to be in tandem with current realities. Microfinance banks are encouraged to have good lending behavior. This is because of the positive and significant impact of credits on economic growth in economy. Strict and firm compliance with standard on assets quality necessary is necessary to financial institution especially Microfinance Bank. This is because good quality of banks’ assets enhances better performance of micro finance banks.