COMMERCIAL BANKS’ CREDIT AND MANUFACTURING SECTOR PERFORMANCE IN NIGERIA

Abstract

This research investigates the impact of loans provided by banks on the industrial sector in Nigeria throughout the time frame of 1993 to 2023. The paper used an ex post facto research design. The dependent variable utilised to assess the viability of the manufacturing sector was the output of the industry. The explanatory factors included total capital formation, interest rate, and bank credit specifically allocated to the manufacturing industry. Data was gathered from the Central Bank of Nigeria 2022 bulletin. Hypotheses are created and assessed utilising the Ordinary Least Squares. The results indicate that overall capital investment has a substantial outcome on Nigeria's manufacturing sector production. The interest rate has a substantial implication on Nigeria's industrial production. Bank lending to the industrial sector in Nigeria has a substantial outcome on the production of the industrial sector. The r² suggests that around 66% of the fluctuations in the output of the manufacturing industry in Nigeria may be accounted for by alterations in the credit variables of banks. The study's findings indicate that bank lending has an important and beneficial implication on the viability of Nigeria's industrial sector. According to the paper, monetary authorities need to establish a strong supervisory framework that values caution and conforms to industry best practices, as well as adopt an active measure to bank supervision. Monetary and fiscal policy should be effectively coordinated to promote and strengthen the economy. Banks must prioritise risk management and maintain sound corporate governance to effectively and efficiently manage their resources. Banks should also prioritise the training and retraining of their personnel to ensure they possess the necessary skills and expertise to provide efficient and high-quality service to investors.