Bank Credit and the Performance of Manufacturing Industry in Nigeria (1981 to 2023)

Student: Mmesoma Esther Okwudili (Project, 2025)
Department of Economics
University of Nigeria, Nsukka, Enugu State

Abstract

The study examined the effect of commercial bank credit on the manufacturing sector output in Nigeria from 1981 to 2023 using the Auto Regressive Distributed Lag method. Five variables of manufacturing sector GDP, inflation rate, lending interest rate, commercial bank credit to the manufacturing sector and broad money supply were used for the study. The variables were tested for unit root using the Augmented Dickey Fuller approach and manufacturing sector GDP, lending interest rate and broad money supply were integrated at level I(0) while commercial bank credit o manufacturing sector and inflation rate were integrated at first difference I(1). The study found that, commercial bank credit to manufacturing sector and inflation rate have positive effect on manufacturing sector output while lending interest rate and broad money supply have negative effect with manufacturing sector output in Nigeria. The study therefore recommended formulation and implementation of policies that aim at reducing both inflation and interest rates on one hand and on the other hand, increasing both loans and advances as well as broad money supply so as to enhance improvement in the manufacturing sector’s output.Keywords: Bank credit, manufacturing sector, ARDL

Keywords
Manufacturing Industry bank credit commercial bank ARDL output interest rate broad money supply inflation rate gross domestic product.
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