Bank Credits: An Aid to Economic Growth In Nigeria

Abstract

This paper explores the necessity of bank credit and economic growth of Nigeria, the paper examines the relationship between bank credit and economic growth in Nigeria over the period under review. However the problem associated with bank credit facility is the constraint and regulation imposed by CBN on the percentage of credit to be given to the entrepreneurs. The study used Secondary data from  banks credit on sectorial distribution such as production, General commerce, services and others were spread across the period 1980- 2011. Various statistical technique such as  Diagnostic test, Unit root,  co-integration Var model and Casuality test are statistically used to test the stability function, stationary properties, variable relationship and casuality effect of the variable and the result revealed that the time series properties of the variables are stationary and co integrated at most 1 with at least 2 co integrating equation. The study also showed that all the  bank credit measures such as Total Production Bank Credits (TPTBKC), Total General Commerce Bank Credits (TGCBKC), Total Services Bank Credit (TSCBKC), and Other Banks Credit (OTHBKC) did not granger cause GDP instead GDP exerted influencing factor on them. More so, short run relationship exited between bank credit measures and GDP as sustainable key player in the economy It therefore recommended total supervision and over haul of the banks credit activities towards encouraging Investors in Nigeria for economic growth.

Key words: Bank credits, Economic Growth, Sectorial Distribution, Production, General Commerce.