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A Modelling Impact of Some Commercial Banks Credit on the Nigerian Economy
Abstract
The banking industry is the largest funding source for the economy`s private and public sectors. Therefore, it plays a crucial role in ensuring the smooth operation of the real sector, which drives the economy. The decline in petroleum products has negatively impacted the Nigerian economy, prompting the government to advocate for economic diversification. The financial sector`s role in the economy has gained significant attention and importance in modern studies on economic growth. This paper uses regression analysis and the Augmented Dickey-Fuller Test to assess validity and stationarity, confirming that all variables are stationary at I(1).
The results indicate that the coefficient estimates for each predictor are significantly different from zero, suggesting that the predictors` linear relationship with Nigerian economic growth is sufficient. A t-test shows that the effect of credit is positive for agriculture and manufacturing and negative for exports. The research concludes that credit to manufacturing significantly boosts Nigeria`s growth, while credit to exports has a significant negative impact. However, the positive effect of agricultural credit on GDP is not significant at the 5% level.
Keywords
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