EFFECT OF CREDIT TO COMMERCIAL BANKS ON ECONOMY GROWTH IN NIGERIA (2000-2022)

Abstract

This study assessed the effect of credit to commercial banks on the economic growth of Nigeria 2000–2022. The specific objectives of the study are to; (i) determine the effect of credit to commercial banks in the manufacturing sector on real gross domestic product in Nigeria and (ii) determine the effect of credit to commercial banks in the agricultural sector on real gross domestic product in Nigeria. (iii)Examine the influence of interest rates on real gross domestic product in Nigeria. The study used secondary sources of data from the Central Bank of Nigeria Statistical Bulletin. An ex-post facto research design was also adopted. The study employed the Author Regressive Distribution Lag (ARDL) method. The result revealed that Commercial Bank Credit to Manufacturing Sector has a positive coefficient and significant result on Nigeria’s Real Gross Domestic Product, with (0.830338; p-value=0.0000<0.05). Commercial Bank Credit to the Agricultural Sector has a positive and significant effect on Nigeria’s Real Gross Domestic Product (0.010424; p-value=0.0385< 0.05). Interest rate has positive and no significant influence on Nigeria’s Real Gross Domestic Product (0.296302; p-value=0.6708 >0.05). The government should strengthen institutions that are responsible for granting loans and advances to the manufacturing sector because of its attendant benefit not only to the banks but also to the economy at large. Commercial banks in Nigeria should as a matter of urgency create an enabling business environment and credit services for farmers to access cheap funds to enhance agriculture business growth and innovation.