EFFECT OF COMMERCIAL BANK LENDING RATE ON THE MANUFACTURING SECTOR PERFORMANCE OF NIGERIAN ECONOMY

ABSTRACT

The study was design to investigate the impact of commercial bank lending on manufacturing sector performance in Nigeria covering the period of (2005 – 2017). The objective of the study were: To investigate the impact of commercial bank lending rate on manufacturing sector performance in Nigeria. To evaluate the impact of commercial bank loan and advance on manufacturing sector performance in Nigeria. Ordinary least square technique was employed to draft out findings and thus: Commercial bank lending rate has an insignificant effect on the manufacturing sector performance in Nigeria. Commercial bank loan and advance has a significant effect on the manufacturing sector performance in Nigeria. Base on the findings, the study recommends that, government through the Central Bank of Nigeria should pursue policies that lower lending rate especially to the investors in order to increase the output of the manufacturing sector in Nigeria. Despite the significant effect, there is need for policy makers should encourage commercial banks to continue giving out loan and advance especially to manufacturing companies to keep improving productivity through upgrading of its technologies. Thus, increasing the manufacturing sector in Nigeria.

TABLE OF CONTENTS

Title page ﾿ i

Declaration ﾿ ii

Certification ﾿ iii

Dedication ﾿ iv

Acknowledgements ﾿ v

Table of contents ﾿ vi

List of tables ﾿ ix

Abstract ﾿ x

CHAPTER 1

INTRODUCTION

1.1    ﾿ Background to the Study ﾿ 1

1.2 ﾿ Statement of the Problem ﾿ 2

1.3 ﾿ Objectives of the Study ﾿ 2

1.4 ﾿ Research Questions ﾿ 4

1.5 ﾿ Hypotheses ﾿ 5

1.6 ﾿ Significance of the Study ﾿ 5

1.7    ﾿ Scope of the Study ﾿ 6

1.8 ﾿ Limitations of the Study ﾿ 6

1.9 ﾿ Definition of Terms  ﾿ 6

CHAPTER   2

REVIEW OF RELATED LITERATURE

2.1 ﾿ Conceptual Review ﾿           7-8

2.1.1 ﾿ Overview of the Nigerian Manufacturing Sector ﾿           9-10

2.1.2 ﾿ Structure of the Nigerian Manufacturing Sector ﾿ 11

2.1.3 ﾿ Limitations of the Manufacturing Sub-sectors ﾿ 11

2.1.4 ﾿ Limitations of the Financial Sector ﾿           12-14

2.1.5 ﾿ Determinants of Commercial Banks’ Lending Behaviors in Nigeria ﾿           15-18

2.2    ﾿ Nigerian Gross Domestic Product Concept ﾿           19-21

2.3 ﾿ Commercial Banks Credits and Manufacturing Sector output in Nigeria. ﾿             22-23

2.4 ﾿ Theoretical Review ﾿ 24

2.4.1 ﾿ Loan Pricing Theory ﾿ 24

2.4.2 ﾿ Theory of Multiple Lending ﾿ 25

2.4.3 ﾿ Credit Market Theory ﾿ 25

2.4.4 ﾿ Loanable Funds Theory ﾿ 25

2.5 ﾿ Empirical Review ﾿           26-29

CHAPTER   3

RESEARCH METHODOLOGY

3.1 ﾿ Research Design ﾿ 30

3.2 ﾿ Data Collection and Instrument ﾿ 30

3.3 ﾿ Model Specification ﾿ 30

3.4 ﾿ Description of Variables ﾿ 30

3.4.1 ﾿ Manufacturing Output ﾿ 31 ﾿

3.4.2 ﾿ Commercial Bank Loans ﾿ 31

3.4.3 ﾿ Commercial Bank Interest Rate ﾿ 32

3.5 ﾿ Techniques of Analysis ﾿ 32

3.6 ﾿ Decision Rule ﾿ 32

CHAPTER 4

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1 ﾿ IntroductionTable1: Data Presentation ﾿ 33

4.2 ﾿ Presentation of Ordinary Least Square Regression (OLS) Result. ﾿ 34

4.2.1 ﾿ Impact of Commercial Bank Lending Rate on the Manufacturing Sector ﾿ 34

4.2.2 ﾿ Evaluation Based on Theoretical Criteria (A Priori Expectations ﾿

Based on Commercial bank lending rate ﾿ 34

4.3 ﾿ The Statistical Criteria (First Order) Test ﾿ 35

4.3.1 ﾿ Coefficient of Determination (R2) ﾿ 36

4.3.2 ﾿ The t-Statistic (Test of Hypothesis) ﾿ 36

4.4.3 ﾿ The F-Test ﾿             37-38

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 ﾿ Summary of Findings ﾿ 39

5.2 ﾿ Conclusion ﾿ 39

5.3 ﾿ Recommendations ﾿ 40

REFERENCES ﾿ 41

APPENDIX ﾿ 4

LIST OF TABLES

Table1: Data Presentation ﾿ 33

Table 2: Dependent Variables ﾿ 34

Table 3: Tabular representation of the T-statistic results ﾿ 37