Evaluating the Nexus between Credit Supply and Sectoral Performance in Nigeria

Onwioduokit, Emmanuel A. and Bassey, Godwin E. and Effiong, Ubong Edem (2025) Evaluating the Nexus between Credit Supply and Sectoral Performance in Nigeria. INSTITUTIONES ADMINISTRATIONIS - JOURNAL OF ADMINISTRATIVE SCIENCES, 5 (2). pp. 74-103. ISSN 2786-1929

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Abstract

This study investigates the impact of commercial bank credit on the performance of the agricultural, industrial, and commercial sectors of the Nigerian economy from 1991 to 2023. The analysis employed the Fully Modified Ordinary Least Squares (FMOLS) method and standardized regression analysis to evaluate the relationships. The FMOLS results reveal that in the agricultural sector, commercial bank credit exhibited a positive but statistically insignificant effect on sectoral performance, while the Agricultural Credit Guarantee Scheme Fund and agricultural employment had positive and statistically significant impacts. In the industrial sector, commercial bank credit demonstrated positive and significant effects on sectoral performance. Similarly, in the commercial sector, credit supply exerted positive and significant impacts, whereas the interest rate had a negative and significant effect on performance. The standardized regression analysis further highlighted that credit to the industrial sector had the greatest relative impact on Nigeria’s economic growth. Based on these findings, the study recommends prioritizing credit allocation to the industrial sector to enhance its contribution to the overall growth and development of the Nigerian economy.

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