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Bank Credits to the Private Sector: Potency and Relevance in Nigeria’s Economic Growth Process

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  • Prince C. Nwakanma
  • Ikechukwu S. Nnamdi
  • Godfrey O. Omojefe

Abstract

This study aims at evaluating the nature of long-run relationship existing between bank credits to the private sector of Nigeria’s economy and the nation’s economic growth as well as the directions of prevailing causality between them. Covering the period 1981 and 2011 (31 yrs), the Autoregressive Distributed Lag Bound (ARDL) and Granger Causality techniques were employed. The results indicate significant long-run relationship between the study variables but without significant causality in any direction. Measures including development of relatively  long tenured bank credit products as well as enforcement of credit regularization contracts are recommended in order to strengthen the operations of banks in Nigeria and their expected roles in financing entrepreneurship.

Suggested Citation

  • Prince C. Nwakanma & Ikechukwu S. Nnamdi & Godfrey O. Omojefe, 2014. "Bank Credits to the Private Sector: Potency and Relevance in Nigeria’s Economic Growth Process," Accounting and Finance Research, Sciedu Press, vol. 3(2), pages 1-23, May.
    • Handle: RePEc:jfr:afr111:v:3:y:2014:i:2:p:23
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    References listed on IDEAS

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    2. Mr. Joe Crowley, 2008. "Credit Growth in the Middle East, North Africa, and Central Asia Region," IMF Working Papers 2008/184, International Monetary Fund.
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    4. Demetriades, Panicos O. & Hussein, Khaled A., 1996. "Does financial development cause economic growth? Time-series evidence from 16 countries," Journal of Development Economics, Elsevier, vol. 51(2), pages 387-411, December.
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    6. Hassan, M. Kabir & Sanchez, Benito & Yu, Jung-Suk, 2011. "Financial development and economic growth: New evidence from panel data," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(1), pages 88-104, February.
    7. Vittas, Dimitri & Cho, Yoon Je, 1996. "Credit Policies: Lessons from Japan and Korea," The World Bank Research Observer, World Bank, vol. 11(2), pages 277-298, August.
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    Cited by:

    1. Joshua Adewale, ADEJUWON & Azeezat Atinuke, OLADIMEJI, & Adefisayo Oluwakemi, ADEJUWON, 2023. "Effect of Trade Credit and Credit Policy on the Performance of Building Industry in Nigeria," Multidisciplinary Journal of Social Sciences, Association of Forensic Accounting Researchers (AFAR), vol. 3(1), pages 21-47, June.

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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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