Over the years the downturn of capital formation and domestic investment have resulted in growth instability in Nigeria as such this study examines the impact of Deposit money bank activities on capital formation in the Nigerian economy. To achieve this, a model was formulatedtoempirically examine the impact of commercial banks on capital formation in Nigeria. The explanatory variables were bank savings (BS), liquidity ratio (LR) and deposit rate (DR)..The variables were subjected to unit root test and they were all stationary at first difference I(1) except Deposit Rate (DR) which was stationary at level “I(0)”. Since the Variables were not all stationary at level the ARDL co-integration test and error correction mechanism were used to determine the long-run and short-run relationship between the variables. The variables were found to be co-integrated and the ECM was statistically significant indicating presence of short run mechanism. The result obtained showed that BS had a positive but insignificant relationship with GFCF. The conclusion and recommendation made was that the economy financial policies makers, managers and implementers should reassess and strengthen existing policies and their implementation to ensure steady flow of investible capital for continuous growth in the economy.
