Abstract:
The study examined the effects of taxation and government expenditure on the performance of deposit money banks in Nigeria for the period 1981 to 2017. Specifically, the study sought to; (i) examine the effect of taxation on the capital base of deposit money banks in Nigeria for the period 1981-2017, (ii) assess the influence of government expenditure on credit creation by deposit money banks in Nigeria for the period studied, (iii) measure the effect of taxation on the credit creation of deposit money banks in Nigeria within the period 1981-2017, and (iv) evaluate the effect of government expenditure on the asset base of deposit money banks in Nigeria from 1981-2017. The study adopted ex-post-facto and analytical designs. Data used were of secondary and time-series nature which were sourced from Central Bank of Nigeria, Statistical Bulletins and Publications of the National Bureau of Statistics. The data collected were subjected to various pre-tests to confirm its goodness before analyzing them with Autoregressive Distribution Lag Model (ARDL) form of regression. The findings from the study with respect to the stated objectives show that there was a positive and significant effect of taxation on capital base of deposit money banks in Nigeria; government expenditure had positive and significant effect on the credit creation of deposit money banks in Nigeria; taxation had positive and significant influence on the credit creation of deposit money banks in Nigeria; and government expenditure had positive and significant influence on the asset base of deposit money banks in Nigeria. It was recommended that the three tiers of government (the Local Council, the State and the National) should fashion out good strategies and enlightenment programmes on tax collection. Also government should encourage consumption and investment through expenditure so as to create jobs for the unemployed. More so, an enabling macro-economic environment needs to be created to allow banks perform their core role of credit creation for the overall benefit of the economy.
