Bank Credits and Economic Growth in Nigeria

This study investigates the relationship between bank credit and economic growth in Nigeria. In this study, bank credit was proxied by credit to production sector, credit to general commerce sector, credit to service sector and credit to other sectors, while the dependent variable being economic growth was proxied by gross domestic product. Secondary data were sourced from Central Bank of Nigeria Statistical Bulletin, for the period spanning through from 1992 to 2022. Multiple regression analysis was employed using Ordinary Least Square (OLS) in the empirical analysis. The findings from the study indicates that credit to production sector has a positive and significant relationship with gross domestic product; credit to general commerce sector revealed a positive but insignificant relationship with gross domestic product; credit to service sector had a negative and insignificant relationship with gross domestic product; while credit to other sectors revealed a positive and insignificant relationship with gross domestic product. Based on the findings, the study recommended amongst others that; policies be formulated to facilitate easier access to credit for the production sector. This can be done through interest rate adjustments, relaxed collateral requirements, or specific loan programs tailored for businesses in the production sector; government and affected institutions to explore and encourage alternative investment channels for businesses in general commerce instead of solely relying on bank credit. These alternatives could include venture capital or government backed initiatives that have the potential to stimulate growth in the commerce sector.