ABSTRACT

Microfinance banking and Economic stability has a nexus that cannot be overemphasized This is because the growth of economy is dependent on the availability of liquidity (in terms of small credit niche) to small and medium scale enterprises. Consequently, this study estimated the effect of microfinance banks’ on economic growth in Nigeria from 1990 to 2021 using the multivariate ordinary least square (OLS) approach to regression analysis. The OLS regression estimates suggested that the Microfinance bank loans (MFBL) and microfinance bank investments (MFBI) significantly and positively influences economic growth in Nigeria. However, microfinance liquidity ratio (MBLR) and inflation rate (INF) failed the significance test at the 5 percent level; indicating that they do not have any significant impact on economic growth in Nigeria. The study recommends among others that government and other stakeholders should encourage the activities of microfinance banks especially lending and investments in view of its relevance to the growth of the economy in Nigeria. Also, management of microfinance banks should introduce strategies that can increase the loans and investments of microfinance banks thereby encourage the growth of the Nigerian economy.