Asian Economic and Financial Review, 2014, 4(8): 1123-1130 1123 FINANCING CAPITAL INVESTMENTS IN NIGERIA: THE ROLE OF THE BANKING INDUSTRY Jude A. Aruomoaghe Department of Accounting, College of Business & Management Studies, Igbinedion University, Okada. Edo State, Nigeria Ekundayo Olugbenga Department of Accounting, College of Business & Management Studies, Igbinedion University, Okada. Edo State, Nigeria ABSTRACT A developing nation like Nigeria needs huge capital outlay to finance the needed infrastructures and capital investments necessary to drive the economy. This study lays much emphasis on whether the banking industry is really financing capital investment thereby contributing immensely to the development of the economy. It also looks at the contribution of financial institutions in promoting the development of the stock market thereby mobilizing fund that will enhance manufacturing of goods. Data were collected from the CBN statistical bulletin spanning a period of 32 years (1981 – 2012). The data collected were analysed with regression using e-view software. It was discovered that the banks have contributed much in financing capital investments and stock market development in Nigeria. It was recommended that financial institutions should be encouraged to mobilize more deposit for lending that will aid capital investment. While the Central Bank on the other hand should reduce its minimum rediscounting rate. © 2014 AESS Publications. All Rights Reserved. Keywords: Financing, Capital, Investment, Banking industry, Nigeria. 1. INTRODUCTION For any nation to develop her economy, she needs to mobilize adequate financial resources, which will aid such development. In order to sustain the rate of such economic development, the government should make a conscious effort to ensure that adequate funds are available to drive such development. This is necessary because the mobilization of financial resources will lead to capital formation and capital formation requires the release of domestic goods and services, which promote the real investment. Therefore, any economy that wants to increase its real capital formation must be able to provide a climate receptive to the resource from overseas and the Asian Economic and Financial Review journal homepage: http://aessweb.com/journal-detail.php?id=5002