Bank Credits to the Private Sector: Potency and Relevance in Nigeria’s Economic Growth Process

Abstract

This study aims at evaluating the nature of long-run relationship existing between bank credits to the private sector of Nigeria’s economy and the nation’s economic growth as well as the directions of prevailing causality between them. Covering the period 1981 and 2011 (31 yrs), the Autoregressive Distributed Lag Bound (ARDL) and Granger Causality techniques were employed. The results indicate significant long-run relationship between the study variables but without significant causality in any direction. Measures including development of relatively long tenured bank credit products as well as enforcement of credit regularization contracts are recommended in order to strengthen the operations of banks in Nigeria and their expected roles in financing entrepreneurship.

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