Commercial Bank Credit and Manufacturing Sector Output in Nigeria

Abstract

This study examines the effect of bank credits on the manufacturing sector output in Nigeria economy for the period 1981 to 2019 with data from Central Bank of Nigeria (CBN) Statistical Bulletin (2020) and World Bank Report (2020). In order to achieve the objectives of this study, the study employs Dynamic Ordinary Least Squares techniques, Error Correction Model as well as subjecting the data to various diagnostic and pre-regression tests. The results revealed that bank loans to manufacturing sector and government expenditure on economic services exhibit a direct and significant relationship with manufacturing output while lending interest rate exhibits an inverse and significant relationship with manufacturing sector output. The speed of adjustment of the manufacturing sector output to equilibrium in the event of a distortion is 51%. The recommendation of this study is the necessity for promoting bank credits to support manufacturing sector of the country while keeping lending interest rate as minimal as possible.