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Modelling other depository corporations’ sectoral credit and economic growth nexus in Nigeria: a panel ARDL approach

Author

Listed:
  • M. O. Adenomon

    (Nasarawa State University)

  • Hamman Ibrahim

    (University of Abuja)

Abstract

In this study, the panel autoregressive distributed lag (PARDL) approach was used to investigate the link between the sectoral credit of other depository corporations and economic growth in Nigeria. The sectoral GDP used in the study served as a proxy for the dependent variable measuring economic development, and the sectoral credits made by ODCs to 19 different economic sectors, gross fixed capital formation, trade openness, the exchange rate, and the prime lending rate served as independent variables. All datasets, which cover the years 2010Q1 through 2024Q2, were gathered from the FinA application and the Statistical Bulletin of the Central Bank of Nigeria. The data stationarity test was carried out via Im, Pesaran, and Shin (IPS) and Levin, Lin, and Chu (LLC), which revealed that nominal gross domestic product, nominal gross fixed capital formation and foreign direct investment inflow are stationary at level, whereas the prime lending rate, trade openness, ODC sectoral credit, the consumer price index, and the exchange rate are stationary at the first difference, indicating a combination of I(0) and I(1) series. The PARDL analysis shows that the DFE is the preferred model on the basis of the Hausman test. The DFE results revealed that 36.6 percent of the disequilibrium in the Nigerian economy will be corrected in the long run and that NGFCF, TOP, PLR, and CPI influence sectoral economic growth in the short run, whereas SCREDIT, CPI, and FDI have long-run effects on sectoral economic growth in Nigeria. The study suggests several recommendations to increase GDP growth through targeted economic policies, including improving domestic credit accessibility, which is crucial for stimulating investment and consumption; improving trade conditions, which is essential for fostering economic growth; and enhancing financial literacy and education, which is essential for informed financial decisions. Additionally, policymakers should adopt monetary policies that target stable and moderate inflation levels to stimulate investment and consumption. Finally, governments should design incentives, simplify regulatory processes, and foster partnerships between local businesses and foreign investors.

Suggested Citation

  • M. O. Adenomon & Hamman Ibrahim, 2025. "Modelling other depository corporations’ sectoral credit and economic growth nexus in Nigeria: a panel ARDL approach," SN Business & Economics, Springer, vol. 5(4), pages 1-30, April.
    • Handle: RePEc:spr:snbeco:v:5:y:2025:i:4:d:10.1007_s43546-025-00797-9
    DOI: 10.1007/s43546-025-00797-9
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    References listed on IDEAS

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    More about this item

    Keywords

    Panel ARDL; Panel unit root; Sectoral GDP; Gross fixed capital formation; Trade openness; Exchange rate; Prime lending rate;
    All these keywords.

    JEL classification:

    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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