Effects of Commercial Banks Credit to Small Scale Enterprises, Manufacturing and Agricultural Sectors on Economic Growth in Nigeria.

Abstract

This study examines the effects of commercial bank credit to agriculture (CBAFF), small-scale enterprises (CBSSE), and manufacturing sectors (CBMF) on economic growth (GDP) in Nigeria. Annual time series data covering the periods of 1992 to 2017, collected from the Central Bank of Nigeria and World Bank were used in the study. The stationarity of the series was evaluated using ADF, PP and KPSS unit-roots, whereas the long-run and the short-run dynamic relationship were analysed using the ARDL bound test technique. The findings of the study revealed that there is a long-run relationship between the variables. It also shows that the error correction term is negative and statistically significant. This further indicates that CBAFF has a positive and statistically significant effect on GDP in both the short-run and in the long run; CBSSE has a negative effect on GDP in the short run but a positive effect in the long run, whereas CBMF has a negative effect on GDP both in the short run and in the long run. The study, therefore, recommends that more commercial bank credit should be made available to these key sectors at the lower interest rate and longer repayment period and also other factors such as basic infrastructure, incentives, subsidies should be provided by the government to improve the performance of these sectors (especially manufacturing).