The effect of bank credit on the performance of the manufacturing sector in Nigeria

Olanrewaju F. Nwabuisi (), Adesina M. Oke-Bello, Adegboyega S. Oyewole, Anu Toriola, Rahmon Folami and Adewale Olakunle Afolabi
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Olanrewaju F. Nwabuisi: College of Primary Education, Epe, Lagos
Adesina M. Oke-Bello: Yaba College of Technology, Yaba, Lagos, Nigeria
Adegboyega S. Oyewole: Dept of Business Education, College of Primary Education, Epe, Lagos
Adewale Olakunle Afolabi: Dept of Business Administration, Olabisi Onabanjo University, Ago-Iwoye, Nigeria

BizEcons Quarterly, 2020, vol. 9, 18-29

Abstract: In Nigeria, one of the critical challenges of manufacturing firms is lack of funds which is evident in the low contribution of the sector to economic growth. This study investigates the effect of bank credit on the performance of manufacturing sector in Nigeria. Based on ex post facto research design, we formulate an econometric model where manufacturing output is the dependent variable while bank credit, interest rate and exchange rate are the explanatory variables. Annual time series data from 1981 to 2017 sourced from the Central Bank of Nigeria Statistical Bulletin and was analyzed using the dynamic ordinary least square (DOLS) technique. We find that bank credit and interest rate show a significant positive effect on manufacturing sector performance while exchange rate shows a significant negative effect on manufacturing sector performance in Nigeria. It is evident from the result that bank credit has a significant positive effect on the performance of manufacturing sector in Nigeria. It becomes imperative for the monetary authorities to introduce policy that will bring down lending rate to stimulate borrowers and make deposit rate attractive to encourage savings.

Keywords: Bank credit; Manufacturing; Interest rate; Exchange rate; Savings (search for similar items in EconPapers)
JEL-codes: C32 E51 L60 N37 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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