Commercial Bank Credit and Manufacturing Sector Performance in Emerging Economies: Evidence from Nigeria 1985-2018

Abstract

1. Introduction The manufacturing sector remains a key driver of economic growth. Its performance is driven largely by monetary policy action, especially benchmark lending rate, loans and advances to the sector. Precisely, an appropriate lending rate remains vital for achieving improved manufacturing sector performance in the emerging economies. High lending rate increases cost of borrowing, retards domestic investment, diminish aggregate demand, increase unemployment, weaken economic growth and discourages manufacturer from commercial banks' loans (Okafor, Ogbonna & Anaemena, 2020). Manufacturing sector plays a vital role in a modern economy and has many dynamic benefits essential for economic transformation. The emerging economies are not an exception as the sector is responsible for the production of goods and sustainable growth. Manufacturing sector has been treated as a leading sector for most of the developed economy. It always has shown contribution towards boosting GDP, creation of employment, improving per capita income etc. it also broadens the way to improve the economy with a significant faster way by creating a connection among many other sectors. As per Anyanwu (2010), manufacturing sector significantly improves Gross Domestic Product (GDP). Nigeria, being a rising economy also has put its efforts for using substitution strategy to enhance its manufacturing sector. Light industry and assembly related manufacturing initiatives were prime among its up to 1970. Turneries tobacco processing, textiles, beverages and petroleum products were the main players for this industry. Third National Development Plan (1975-1980) had shifted this orientation to the heavy industry. With the policy of expanding, finished goods had been increased (Ariyo, 2015). In this scenario, more technology-based developments have been noticed in the productive sector, which had driven the low level of production to a more automated and proficient mass production system. In spite of this, socioeconomically constraints had been seen severely. The major factor is current economic planning and policy instruments (Ogar, 2014). Apart from deposit money banks' credits, the Federal Government's

Recapitalisation and Real Sector Performance in Nigeria: An Ardl Analysis of the Service Sector

“…In their study, Yua, Upaa, Adiga, and Haruna (2020) conducted an examination of the performance of commercial banks in relation to credit provision and the manufacturing sector within emerging economies, specifically focusing on Nigeria. The study utilised secondary data sourced from the statistical bulletin of the Central Bank of Nigeria for the purpose of analysis using the Vector Error Correction framework.…”