Impact of Bank Deposit on Manufacturing Sector Output: The Case of Nigeria

Abstract

Manufacturing sector plays an important role in the development of modern economy all over the world, whether advance or developing country. In the light of this, this study investigated the impact of bank credit on manufacturing outputfor the period 1981-2019. The variables were tested for stationarity. Error correction mechanism was adopted for the estimation of the model. Based on the result of the study, it was observed that credit to the manufacturing output has direct relationship with manufacturing output and it is statistically significant. Total government expenditure has direct relationship with manufacturing output, but not statistically significant. The relationship between exchange rate and corruption on output of manufacturing were Binverse and were not statistically significant. The most important variable affecting output of manufacturing sector is credit to the manufacturing. Manufacturing output in Nigeria does not significantly respond to changes in interest rate and government expenditure. The study concluded that credit to the manufacturing output is significant to the growth of manufacturing sector output in Nigeria economy. The paper recommended a better and stronger credit facility to manufacturing sector, should be promoted and sustained; there should be strong and comprehensive legal framework that will continue to aid in monitoring the performance of credit of the commercial banks. The most important variable affecting manufacturing output is credit to the manufacturing sector; effort should be made towards encouraging more credit to the manufacturing sector in Nigeria.