Does Bank Credit Have Any Impact on Nigeria's Domestic Investment?

IOSR - Journal of Economics and Finance, 6(4), 32-43, 2015

12 Pages Posted: 8 Jan 2019

See all articles by Ebele Nwokoye

Ebele Nwokoye

Nnamdi Azikiwe University - Department of Economics

Amaka Metu

Nnamdi Azikiwe University - Department of Economics

Kalu, C. U

affiliation not provided to SSRN

Date Written: August 01, 2015

Abstract

There is an extensive literature on the role of the bank lending and credit facilities in Nigeria but most of these literature concentrate on its impact on the gross domestic product. This study focuses on the impact of Nigeria’s banking sector on domestic investment from 1980 to 2012 bearing in mind that funding is one of the major challenges of domestic entrepreneurs in Nigeria. A domestic investment model was adopted and the unit root test was first applied to the data set. All the data are stationary and the ordinary least square method was used to identify the impact of capital market activities on domestic investment in Nigeria using the cointegration technique. Findings reveal that bank credit negatively though significantly impacted on domestic investment in the long run while its short run impact is both positive and significant. This is an indication that financial intermediation (captured by bank credit to private sector) is a strong driver of domestic investment in Nigeria only in the short run. The study thus recommends amongst others, the strengthening of Nigeria’s banking system with more funds and supervisions as well as the encouragement of both foreign and domestic investments through government’s creation of a more conducive political and economic climate.

Keywords: bank credits, domestic investment, private sector, small and medium scale enterprises

Suggested Citation

Nwokoye (nee Nwabude), Ebele and Metu, Amaka Gertrude and Kalu, Chris, Does Bank Credit Have Any Impact on Nigeria's Domestic Investment? (August 01, 2015). IOSR - Journal of Economics and Finance, 6(4), 32-43, 2015. Available at SSRN: https://ssrn.com/abstract=3306423

Ebele Nwokoye (nee Nwabude) (Contact Author)

Nnamdi Azikiwe University - Department of Economics ( email )

Enugu-Onitsha Expressway
Nnamdi Azikiwe University
Awka, Anambra
Nigeria

HOME PAGE: http://www.unizik.edu.ng/profile/nwokoyees

Amaka Gertrude Metu

Nnamdi Azikiwe University - Department of Economics ( email )

Enugu-Onitsha Expressway
Nnamdi Azikiwe University
Awka, Anambra
Nigeria

Chris Kalu

affiliation not provided to SSRN

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