Appraisal of bank credit extension on the Nigerian industrial sector output (1992 to 2019)

Abstract

This study investigated the effect of bank credit extension on the Nigerian industrial sector output. Data for the study spanned from 1992 to 2019. Variables considered include aggregate bank loans and advances, prime lending rate, exchange rate, and inflation rate, and the contribution of the industrial sector to GDP. Data for the study was sourced from the Central Bank of Nigerian Statistical Bulletin (2019). The study adopted the Autoregressive Distributed (ARDL) Lag Model. The F-value reported that bank credit extension has a high statistical impact on the Nigerian industrial sector. Further, the ECM estimated at (-0.17910) signpost that 17.91% of deviation is corrected in the present year. Accordingly, the ARDL short-run result reported that previous values of bank loans and advances, prime lending, and inflation rate exerted a positive impact on industrial sector output. In the Long run, bank loans and advances, prime lending, and exchange rates exerted a direct impact on the Nigerian industrial sector. However, inflation and exchange rate deter the Nigerian industrial sector. More so, bank loans and advances and prime lending rates are statistically significant both in the short and long run. The study Based on the major findings, the study we conclude that bank credit extension jointly contributes significantly to the growth of the Nigerian industrial sector. Based on this, the study recommends that the apex bank should ensure that the present bank loans and advances and prime lending rate should be sustained.