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

Author

Listed:
  • Nwabuisi, Olanrewaju F.

    (College of Primary Education, Epe, Lagos)

  • Oke-Bello, Adesina M.

    (Yaba College of Technology, Yaba, Lagos, Nigeria)

  • Oyewole, Adegboyega S.

    (Dept of Business Education, College of Primary Education, Epe, Lagos)

  • Toriola, Anu K.

    (Dept of Economics, Olabisi Onabanjo University, Ago-Iwoye, Nigeria.)

  • Folami, Rahmon Abiodun

    (Dept of Banking and Finance, Olabisi Onabanjo University, Ago-Iwoye. Nigeria)

  • Afolabi, Adewale Olakunle

    (Dept of Business Administration, Olabisi Onabanjo University, Ago-Iwoye, Nigeria)

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.

Suggested Citation

  • Nwabuisi, Olanrewaju F. & Oke-Bello, Adesina M. & Oyewole, Adegboyega S. & Toriola, Anu K. & Folami, Rahmon Abiodun & Afolabi, Adewale Olakunle, 2020. "The effect of bank credit on the performance of the manufacturing sector in Nigeria," BizEcons Quarterly, Strides Educational Foundation, vol. 9, pages 18-29.
    • Handle: RePEc:ris:buecqu:0018
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    Cited by:

    1. Sami Al-Kharusi & Azmat Gani, 2022. "Financial Credit and Expansion of the Non-Hydrocarbon Sector in Gulf Cooperation Council Countries," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 28(3), pages 105-118, November.

    More about this item

    Keywords

    Bank credit; Manufacturing; Interest rate; Exchange rate; Savings;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • N37 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Africa; Oceania

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