Bank Credit to the Real Sector: A Panacea for Revamping a Recessed Economy. Evidence from Nigeria

Abstract

The study focused on the impact of deposit money bank credit to the real sector on economic growth in Nigeria. The main objective of the research was to determine the impact of bank credit to the real sector in revamping a recessed economy. Time series data covering the period of 1990 to 2016 sourced from the Central Bank of Nigeria Statistical Bulletin were utilized in the study. The Autoregressive Distributed Lag (ARDL) approach to co-integration analysis was used to analyze the data. The study found that deposit money bank credit to agriculture sector significantly affects economic growth in Nigeria. In addition, the study found that deposit money bank credit to manufacturing, mining and quarrying sectors does not significantly contribute to economic growth in Nigeria within the period under review. Given that banking system credit is critical for economic growth, the study thus recommends amongst others that government and concerned agencies should evolve policies that encourages increased bank credit to the real sector. Also, credit should be channeled at concessionary costs to the real sector as their activities stimulate economic growth.

Keywords: Bank Credit, Real Sector, Economic Growth

DOI: 10.7176/RJFA/10-14-03

Publication date:July 31^st 2019