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Deposit Money Bank Credit and Manufacturing Sector Performance in Nigeria

Beauty Okuboere Niyekpemi PhD Ebbeli Peculiar Benedicta

Abstract

This research looked at the relationship between bank credit and manufacturing output in Nigeria from 1993 to 2023. Banking sector credit, which is a proxy for private sector credit, and interest rates were considered stationary, with inflation and the exchange rate serving as control variables. The performance of the manufacturing sector was ascertained through the application of the Augmented Dickey Fuller unit root test. At initial difference, the variables became stationary, despite being integrated of order one I(1). The model's short- and long-term dynamics were determined using the ARDL model. The findings indicate that private sector credit had a negative impact on manufacturing output, which is not statistically significant. This suggests that banking credit did not significantly enhance manufacturing performance. A negative and statistically significant relationship existed between interest rates and manufacturing performance, indicating that higher lending rates dampened production in the manufacturing sector. During the research period, the Granger causality test did not find any correlation between the amount of money lent out by deposit money banks and the amount of manufacturing output. The research found that there was no discernible effect of deposit money bank credit on factory performance improvement. The study's main recommendations include lowering the loan rate, improving the distribution of credit to the manufacturing sector, and more. Key words: Deposit Money Bank, manufacturing sector, performance

Keywords

Deposit Money Bankmanufacturing sectorperformance

References

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