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Impact of private sector credit on the real sector of Nigeria

Author

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  • Aliyu Mamman

    (Department of Business Administration,College of Business and Management Studies,Kaduna Polytechnic, Kaduna-Nigeria)

  • Yusuf Alhaji Hashim

    (Department of Business Administration,College of Business and Management Studies,Kaduna Polytechnic, Kaduna-Nigeria)

Abstract

The real sector is a strategic component of an economy because it produces and distributes tangible goods and services required to satisfy aggregate demand in the economy. For this reason, there is the need for adequate credit flow from the banking industry to the real sector, which in the Nigerian case, the credit flow has been grossly inadequate. This study is carried out to examine the impact of credit to private sector (CPS) on the real sector of Nigeria with a view to assess the significant contribution of CPS to real sector growth in Nigeria. The study used aggregate time series data from 1986 to 2010, which was drawn from central bank of Nigeria (CBN) statistical bulletin and CBN annual report and statement of accounts. The data was analysed using multiple regression and based on the coefficient of determination (R square), the study reveals a 96.1% variation between the CPS and real sector growth in Nigeria. The study cocludes that there is a statistically significant impact of credit to private sector on the real sector of Nigeria. This, suggest that the performance of the real sector is greatly influence by credit to private sector. The study recommends that the federal government of Nigeria through the central bank of Nigeria (CBN) should enhance the financing of the real sector as well as improve credit flow to the sector because of its strategic importance in creating and generating growth of the economy.

Suggested Citation

  • Aliyu Mamman & Yusuf Alhaji Hashim, 2013. "Impact of private sector credit on the real sector of Nigeria," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 3(5), pages 105-116, May.
    • Handle: RePEc:mir:mirbus:v:3:y:2013:i:5:p:105-116
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    1. Olajide Oyadeyi, 2023. "Financial development, real sector, and economic growth in Nigeria," SN Business & Economics, Springer, vol. 3(8), pages 1-21, August.
    2. Stephen Oluwafemi Adeusi & Olufemi Adewale Aluko, 2015. "Relevance of Financial Sector Development on Real Sector Productivity: 21st Century Evidence from Nigerian Industrial Sector," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 5(6), pages 118-132, June.
    3. Vikela Liso Sithole & Tembeka Ndlwana & Kin Sibanda, 2021. "The Relationship between Monetary Policy and Private Sector Credit in SADC Countries," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(1), pages 46-54.
    4. Basharat Batool & Sundas Shafi & Abdur Rahman & Saqib Javed & Misbah Taj, 2024. "The Causal Nexus between Financial Development and Manufacturing Sector: Empirical Study for Pakistan," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(3), pages 109-114.

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