The effect of bank lending rate on output of manufacturing sector in Nigeria

ABSTRACT

The study investigated the effect of bank lending rate on output of manufacturing sector in Nigeria. Time series data spanning from 1995 to 2017 was sourced from Central Bank of Nigeria statistical bulletin and the method of data analysis was the ordinary least squares (OLS) technique. Manufacturing sector output was measured by manufacturing sector contribution to real gross domestic product. Having analyzed the data, it was found that lending rate has a negative and insignificant effect on output of manufacturing sector in Nigeria. On the other hand, the effect of exchange rate and loans and advances was positive and significant on output of manufacturing sector in Nigeria. Based on the findings, it was recommended among other things that there should be review of monetary policy with the target of increasing money supply so as to be able to reduce the costs of borrowing (interest rate). The achievement of this will encourage investors to borrow more for productive activities.  

TABLE OF CONTENTS

Title page ﾿ i

Declaration ﾿ ii

Certification ﾿ iii

Dedication ﾿ iv

Acknowledgement ﾿ v

Table of contents ﾿ vi

List of tables ﾿ vii

Abstract ﾿ viii

CHAPTER ONE

INTRODUCTION ﾿ 1

1.1 Background of the Study ﾿ 1

1.2 Statement of the Problem ﾿ 3

1.3 Objective of the Study ﾿ 4

1.4 Research Question ﾿ 4

1.5 Research Hypotheses ﾿ 5

1.6 Significance of the Study ﾿ 6

1.7 Definition of Terms ﾿ 6

1.8 Organization of the Study ﾿ 6

CHAPTER TWO

REVIEW OF RELATED LITERATURE ﾿ 7

2.0 Introduction ﾿ 7

2.1 Conceptual Review ﾿ 7

2.2.1 Conceptual Clarification of Interest Rate ﾿ 7

2.1.2 The Concept of Sustainability in Manufacturing Sector ﾿ 7

2.1.3 Interest Rate Charged on Borrowers ﾿ 8

2.1.5 ﾿ History of the Nigerian Manufacturing Sector ﾿ 13

2.1.6 Structure and Performance of the Nigerian Manufacturing Sector ﾿ 14

2.2 Theoretical Literature ﾿ 17

2.2.1 Loan Pricing Theory ﾿ 17

2.2.2 Firm Characteristics Theories ﾿ 18

2.2.3. Theory of Multiple-lending ﾿ 18

2.2.4 The Signaling Argument ﾿ 18

2.2.5 Credit market theory ﾿ 19

2.3 Empirical Review ﾿ 22

CHAPTER THREE

RESEARCH METHODOLOGY ﾿ 26

3.1 Research Design ﾿ 26

3.2 Study Area ﾿ 26

3.3 Sources of Data Collection ﾿ 26

3.4 Method of Data Analysis ﾿ 26

3.5 Model Specification ﾿ 27

3.6 Technique for Analysis ﾿ 27

CHAPTER FOUR

PRESENTATION OF DATA, ANALYSIS AND DISCUSSION ﾿ 28

4.1 ﾿ Presentation of Data ﾿ 28

4.1.1 ﾿ Descriptive Statistic ﾿ 29

4.2 ﾿ Analysis and Discussion of Findings ﾿ 29

4.2.1 ﾿ Regression Analysis ﾿ 30

4.2.2 ﾿ Hypotheses Testing ﾿ 31

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS ﾿ 33

5.1 ﾿ Summary of Findings ﾿ 33

5.2 ﾿ Conclusion ﾿ 33

5.3 ﾿ Recommendations ﾿ 34

References

Appendix