Impact of Commercial Bank Lending on Performance of Manufacturing Sector Output in Nigeria

Abstract

This study investigates the impact of commercial bank lending on performance of manufacturing sector output in Nigeria for the period of 2018-2023. The specific objective of this research was to:  Determine the impact of bank credit to private sector on performance of manufacturing sector output in Nigeria, Evaluate the impact of lending rate on performance of manufacturing sector output in Nigeria, and examine the impact of savings on performance of manufacturing sector output in Nigeria. Secondary sources of data were used in this study; they were soured from the annual report of the selected deposit money bank in Nigeria stock exchange. Statistical tools employed on this were unit root test, co-integration and regression. Ordinary Least Square method of data analysis were used in this study. Bank credit to private sector has a positive effect and statistically insignificant on manufacturing sector output. Savings has positive effect and statistically significant on manufacturing sector output. Lending rate has negative and insignificant effect on manufacturing sector output. The study concludes that banks are important in stimulating manufacturing sector output in Nigeria. The study recommends that Commercial banks should be further empowered, so as to be able to grant long-term loan that would boost manufacturing sector’s performance, Saving should be encouraged by establishing more commercial banks in the rural area to ensure mobilization of rural saving for industrial sector’s development. Interest rate must be allowed to operate through market mechanism to ensure that interest rate is determined by demand for loanable fund and the supply of loanable fund.