Global Advanced Research Journal of Management and Business Studies (GARJMBS) ISSN: 2315-5086 September 2014 Vol. 3(9), pp 423-431

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Original Research Articles

Commercial Bank Credit and Sectoral Growth in Sub-Saharan Africa: Evidence from Nigeria 

Ajibola Joseph Olusegun1, Ishola Rufus Akintoye2, Samuel Olajide Dada3

1Babcock Business School, Babcock University, Ilishan-Remo, Ogun State, Nigeria,

2Babcock Business School, Babcock University, Ilishan-Remo, Ogun State, Nigeria,

3Babcock Business School, Babcock University, Ilishan-Remo, Ogun State, Nigeria, 

Accepted 19 September 2014



This paper reviewed the impact of commercial bank lending on Nigeria’s aggregate economic growth for the period 1970-2011. It also reviewed the impact of commercial bank credit on the growth of Services and ‘Others’ sectors, their sub-sectors of transport/communication and public utilities; government and personal/professionals respectively for the same period. The paper relied on the official sectoral classification by the Central Bank of Nigeria and National Bureau of Statistics. Non-oil GDP was adopted as a measure of both the aggregate and sectoral economic growth.  The research work borrowed from the theoretical underpinning of the role of commercial bank lending in economic growth based on the combination of the quantity theory of money and aggregate production function.  A regression analysis was undertaken with a model that related the non-oil GDP as dependent variable to commercial bank credit for current and one year lagged period as the independent variables. The linear regression model showed that the previous year’s loans and advances to services sector had more positive impact on economic growth compared with the current year’s loans and advances. The results show that both previous and current year’s credit to ‘others’ sector had inverse relationship with economic growth. In terms of the sub-sectors, the previous year’s credit to public utilities and transport/telecommunications sub-sectors showed positive contributions to economic growth while the impact of that of current year was negative.  From the results therefore, banks need to monitor more closely their lending to these two sectors of the economy who deal on intangibles. Monetary authorities also need to ensure tight regulations on lending to the sectors to enable them play their roles of providing ancillary services to the real sectors of the economy which ordinarily should be the drivers of the economy. 

Keywords: Economic Growth, Non-oil GDP, Services Sector, Commercial Bank, Credit

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