DOI: 10.36347/sjebm.2023.v10i10.002

Pages: 240-258

This study examined the effect of bank credit on the growth of the Nigerian economy. The study was specifically meant to assess the impact of bank credit to the agricultural sector on the growth of the Nigerian economy; to determine the effect of bank credit to the manufacturing sector on the growth of the Nigerian economy and lastly to assess the effect of bank credit to the mining and quarrying sector on the growth of the Nigerian economy. To achieve these objectives, the study employed the ex-post facto research approach. Time-series data were collected from the CBN Statistical Bulletins using the desk survey method from 1985 to 2018. The data were analysed using various econometric techniques such as the descriptive statistics test, the Augmented Dickey-Fuller (ADF) unit root test, Correlation matrix, and Autoregressive Distributive Lag (ARDL). Findings from the analyses showed that there was an insignificant short-run effect of bank credit on the growth of the Nigerian economy. It was also revealed that there was a significant long-run effect of bank credit on the growth of the Nigerian economy. Based on these findings, the study recommend the establishment of an agency were all commercial farmers would be registered with responsibilities to interface with banks to ensuring that loans are free from collateral requirements, interest rate charges and loan administration bottlenecks in order to encourage commercial farming and towards enhanced economic growth in Nigeria. Also, policies targeted at reducing the interest rate charged on bank credit to the manufacturing sector in Nigeria should be implemented by the CBN through the conscious subsidy of all bank credit to the manufacturing sector as this is required to trigger productivity and enhance short term economic growth.