Effect of Deposit Money Bank’s Credit on Manufacturing Sector Output in Nigeria

Alula Anthonia Uyo, Ihuoma Anthony and Modestus Nsonwu
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Alula Anthonia Uyo: Department of Economics, Veritas University, Abuja, Nigeria
Ihuoma Anthony: Department of Economics, Veritas University, Abuja, Nigeria
Modestus Nsonwu: Department of Economics, Veritas University, Abuja, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 12, 3528-3545

Abstract: This study examines the effect of bank credit, lending rate and inflation rate on the manufacturing sector’s output in Nigeria for the periods between 1981 and 2022. Data were obtained from Central Bank of Nigeria (CBN) Statistical Annual Bulletin. The study employed descriptive analysis techniques and Autoregressive Distributed Lagged modelling approach. Empirical findings from the descriptive analysis revealed significant increasing trend in the time series plots of manufacturing sector output, deposit money banks’ credit to manufacturing sector, lending rate and inflation rate of Nigeria. The study’s empirical findings showed that deposit money banks’ credit to manufacturing sector, lending rate and inflation rate significantly cointegrate with the country manufacturing sector output. Explicitly, this study found that deposit money banks’ credit to manufacturing sector significantly and positively impacts the manufacturing sector output both in the short-run and long-run, which could be interconnected to the significant positive impact of lending rate on deposit money banks’ credit. Similarly, this study found that the inflation rate significantly and negatively impacts the manufacturing sector output both in short-run and long-run, which also could be connected to the significant positive impact of lending rate on inflation rate. Among other recommendations, this study suggests government and policymakers should address the rising lending rate in real time by developing and implementing apt fiscal policies to regulate the lending rate in order to make the manufacturing sector more attractive for productivity and lessen the double figure inflation rate of the country.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bcp:journl:v:8:y:2024:i:12:p:3528-3545

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