IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 10 NO. 10 2024
DOI: 10.56201/ijebm.v10.no10.2024.pg167.189

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Sectoral Credit Allocation and the Growth of Nigerian Real Sector

Dr. Greatness U. Oji and Dr. Ebi R. Odi

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Abstract

This study examined the effect of sectorial credit on real sector growth in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical Bulletin from 1990-2021. Real sector growth was modeled as the function of Commercial banks loans and advances to agricultural sector, Commercial banks loans and advances to manufacturing sector, Commercial banks loans and advances to Export sector, Commercial banks loans and advances to mining and Querying sector and Credit to real estate and construction. The study employed multiple regression models to estimate the relationship that exists between monetary transmission channels and real sector growth. The null Hypotheses (H0) were tested at 0.05 level of significance, Ordinary Least Square (OLS), Augmented Dickey Fuller Test, Johansen Co-integration test, cointegrating equations, parsimonious vector error correction model and pair-wise causality tests were used to conduct the investigations and analysis. From model one; the study found 59.2 percent variation in the growth of Nigeria real sector output could be traced to variation in the sectorial credit allocations. From the findings, the study concludes that sectorial credit allocations have significant effect on the growth of Nigeria real sector. The study recommends that Central Bank of Nigeria should induce the variations of the amount of money changes through the nominal interest rates to increase bank credit. Macroeconomic and monetary policy environment that encourages commercial banks loans and advances to the real sectors of the economy and government through Central Bank of Nigeria should strengthen existing policies on the monetary policy instruments so as to increase and stabilize credit supply in the economy.

keywords:

Sectoral Credit Allocation, Growth, Nigerian Real Sector

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