Priye Werigbelegha Andabai (PhD), Alawaripaka Lordson Cheetham West


In this study, the effect of banks' credit on the performance of the private sector in Nigeria from 1994 to 2021 was investigated. The study adopts secondary data and sourced from the 2021 Statistical Bulletin of the Central Bank of Nigeria. The data set comprise of five variables as employed in the study. The adopted variable were  Output of the Private Sector was used as  Private Sector performance proxy, being the dependent variable; whereas, Total bank Deposit, Credit to the Private Sector, Rate of Interest and Rate of Inflation as regressors. Hypotheses were formulated and  tested using time series econometric techniques. The study reveals that total bank credit has a significant impact on private sector output in Nigeria. Credit to the private sector has a significant impact on output of the private sector in Nigeria. Interest rate has a significant impact on private sector output in Nigeria. Inflation rate  has a significant impact private  sector output in Nigeria. The results indicates 76 per cent adjustment to short run equilibrium for the ECM model to the long run. The R2 shows that around 68 per cent as regards changes in the performance of the economy of Nigeria being explained by changes in deposit money banks’ credit variables. The summary of findings demonstrates that the growth and development of Nigeria's private sector have been significantly influenced by credit from deposit money banks. Based on the results; encouraging the private sector through an expansionary monetary policy and a lower interest rate will help Nigeia’s economy tothrive.The study further suggests that Government and CBN should stabilize the rate of interest  in order to ensure price stability and as a mean to obtain  an the rate of inflation that is a single digit. This might enhance confidence building for institutions in the banking sector; leading to innovations that boost private sector output for the economy.                                     


Private Sector Performance, Deposit Money Banks’ Credit, Nigeria.

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