Commercial Bank Credit and Manufacturing Sector Performance in Emerging Economies: Evidence from Nigeria 1985-2018

Abstract

This study examined commercial banks' credit and manufacturing sector performance in emerging economies: evidence from Nigeria. The specific objectives of the study were to investigate the effect of commercial bank loans and advances (CBLA), commercial banks' lending rates (CBLR), inflation (INFL) and aggregate savings (ASAV)on manufacturing performance in the emerging economies. The study was anchored on loan pricing theory and the neo-classical theory of interest rate. The study used secondary data obtained from the Central Bank of Nigeria statistical bulletin and used for the analysis. The variables for the study were tested for unit root using the Augmented Dickey Fuller test and the test of Johansen cointegration within the framework of vector error correction was applied to test for the short-run and long- run effect. The findings of the study revealed that commercial banks' credit had significant effect on the manufacturing sector performance. The study concluded that commercial banks' credit enhanced manufacturing performance in emerging economies. This paper also suggests some measures in order to boost employment and manufacturing performance in Nigeria.