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Impact Of Commercial Banks’ Credit To The Real Sector On Economic Growth In Nigeria

Author

Listed:
  • Courage Ose Eburajolo

    (Department of Economics, Banking and Finance, Faculty of Social and Management Sciences, Benson Idahosa University, Benin City, Nigeria)

  • Leonard Nosa Aisien

    (Department of Economics, Banking and Finance, Faculty of Social and Management Sciences, Benson Idahosa University, Benin City, Nigeria)

Abstract

The study examined the effect of commercial bank sectorial credit to the manufacturing and agricultural sub-sectors on economic growth in Nigeria with time series data from 1981 to 2015, using co-integration and error correction mechanism for the empirical work. A three equation model was specified to analyze this study, and the variables include; real GDP, bank sectorial credit to manufacturing and agriculture subsectors, monetary policy rate, financial market development, sourced from CBN statistical bulletin and also the interaction variables,. The variables were tested for unit root using the Augmented Dickey Fuller approach and were found to be stationary. The empirical result revealed that commercial bank credit to the manufacturing and agricultural subsectors significantly affects economic growth in Nigeria both in the short run and in the long run. Furthermore, development of the financial sector enhances the growth effects of commercial banks credit to the manufacturing and agricultural subsectors of the economy. It was therefore recommended that the Nigerian apex financial authorities should encourage banks via deliberate policy to increase credits to these subsectors of the economy.

Suggested Citation

  • Courage Ose Eburajolo & Leonard Nosa Aisien, 2019. "Impact Of Commercial Banks’ Credit To The Real Sector On Economic Growth In Nigeria," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 4(1), pages 38-46, March.
    • Handle: RePEc:ora:jrojbe:v:4:y:2019:i:1:p:38-46
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    References listed on IDEAS

    as
    1. Ipalibo Watson Sogules & Emeka Nkoro, 2016. "Bank Credits and Performance of Agricultural and Manufacturing Sectors in Nigeria, 1970-2013," Business, Management and Economics Research, Academic Research Publishing Group, vol. 2(5), pages 90-95, 05-2016.
    2. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    3. Ipalibo Watson Sogules & Emeka Nkoro, 2016. "Bank Credits to Agricultural and Manufacturing sectors and Economic Growth in Nigeria, 1970 – 2013," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 2(4), pages 74-78, 04-2016.
    4. Loening, Josef & Rijkers, Bob & Soderbom, Mans, 2008. "Nonfarm microenterprise performance and the investment climate : evidence from rural Ethiopia," Policy Research Working Paper Series 4577, The World Bank.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    : financial development; real sector; economic growth; commercial banks credits; agricultural sector; manufacturing sector.;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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