Vol 1 No 1 (2020): American International Journal of Supply Chain Management
Research Articles

Commercial Banks Credit and the Performance of Real Sector in Nigeria: 1990-2017

Idih Ogwu Emmanual
Kogi State University
Oluwagbemigun Olupeeka
Adekunle Ajasin University
Adewole Joseph Adeyinka
Adekunle Ajasin University
Published August 10, 2020
  • Commercial Banks, Credit, Real Sector, Lending Rate, Gross Domestic Product.
How to Cite
Emmanual, I. O., Olupeeka, O., & Adeyinka, A. J. (2020). Commercial Banks Credit and the Performance of Real Sector in Nigeria: 1990-2017. American International Journal of Supply Chain Management, 1(1), 1-15. https://doi.org/10.46545/aijscm.v1i1.209


The study examined the arguments and counterarguments within the scientific discussion on commercial banks credit and the performance of real sector in Nigeria. The main objective of the study is to examine the effect of commercial banks credit on the performance of the real sector in Nigeria.Data was sourced from Central Bank of Nigeria Statistical Bulletin. A systematization literary approach for data analysis was Regression Analysis. Findings revealed that bank credit and bank lending rate does not have significant impact on real sector performance in Nigeria. It was showed that there was a positive and significant relationship between agricultural credit guarantee scheme fund and agricultural production in Nigeria. The study therefore recommends that banks should be directed to channel their credits towards the real sector to facilitate overall economic growth and development in Nigeria. It was recommended that there is the need policies that will favor the revamp of the agricultural sector in Nigeria should be given pride of place. Also, monetary authority through the Central Bank of Nigeria should create adequate policies and strategies towards deepening of the financial sector and reducing the cost of credit/loans so as to enhance productivity and consequently enhance the growth of the key sectors of economy such as manufacturing sector.



Download data is not yet available.


Acha, I.A., (2011a) Financial Intermediation by Banks and Economic Growth in Nigeria. Journal of Economics and Sustainable Development. 2(4), 129-139.
Acha, I.A., (2011b). Does Bank financial Intermediation Cause Growth in Developing Economics: The Nigeria Experience. International business and management 3(1), 156-161.
Adegbaju, A. and Olokoyo, P. (2008). The Impact of Commercial Banks Lending to the Real Sector in Nigeria. African Monetary Journal, 1(2), 62-69.
Agbada, A. and Osuji, C.C.,(2013) An Empirical Analysis of Trends in Financial Intermediation and Output in Nigeria. Global Journal of Management and Business Research Finance. 13(9), 19-30.
Agunuwa, E.V., Inaya, L. & Proso, T. (2015). Impact of Commercial Banks’ Credit on Agricultural Productivity in Nigeria (Time Series Analysis 1980 - 2013) International Journal of Academic Research in Business and Social Sciences, 5(11) 337-348
Andabai, P.W. & Eze, G.P. (2018). Bank Credit and Manufacturing Sector Growth in Nigeria (1990-2017): A Causality Investigation; International Journal of Economics, Commerce and Management 6(3), 326-336.
Andabai, P.W. and Tonye, O. (2014). Financial intermediation and economic growth in Nigeria. 1988-2013: A vector Error Correction Investigation. Mediterranean Journal of Social Sciences. 5(17), 19-26.
Azege, M. (2009). The Impact of Financial Intermediation on Economic Growth: The Nigerian Perspective. Research Seminar Presented at the Lagos State University.
Borio, C., Kennedy, N,., and Prowse, S. (1994). Exploring Aggregate Asset Price Fluctuations across Countries: Measurement, Determinants and Monetary Policy Implications, Working paper 157, Bank of International Settlements, BIS, Basle.
Bencivenga, V. R. & Smith, B. D. (1991). Financial Intermediation and Endogenous Growth, Review of Economic Studies, 58, 195-209.
CBN,AnnualReport,2010,http://www.cenbank.org/OUT/2011/PUBLICATIONS/REPORTS/RSD/AR2010/ANNUA REPORT 2010. HTML.
Central Bank of Nigeria (2015). Mid-Year Economic Review
Central Bank of Nigeria (2015). Statistical Bulletin.
Christopoulos. D & Tsionas. E (2004). Financial Development and Economic Growth: Evidence from Panel Unit Root and Cointegration Tests, Journal of Development Economics, 73 (1), 55-74.
Dabwor T. D., (2009). The Nigerian Banking System and the Challenges of Financial Intermediation in the Twenty First Century. Jos Journal of Economics, 4(1).
Demirguc-Kunt, A. & Levine, R. (1999). Bank-based and Market-based Financial Systems: Cross-country Comparisons. The World Bank.
Demirguc - Kurt, Asli & Vojislav Maksimovic (1999) Institutions Financial markets and firm debt maturity. Journal of Financial Economics, 54(3).
Diamond, D. W. (1991). Financial Intermediation and Delegated Monitoring. The Review of Economic Studies, 51(3).
Demetriades O. P. & Hussein A. K. (1996). Does Financial Development Causes Economic Growth? Time Series evidence from 16 countries, Journal of Development Economics, 51(2).
Demetriades, P.O., & Luintel, K. B. (1996). Financial Development, Economic Growth and Banking Sector Controls: Evidence from India. Economic Journal, 106(4), 359-374.
Ebi, B.O., & Emmanuel, N. (2014). Commercial Bank Credits and industrial Subsector’s Growth in Nigeria. Journal of economics and sustainable, 5( 9), 14-27.
Ekine D. I. & Onukwuru, F.M. (2018). Deposit Money Banks’ Credit and Agricultural Sector Performance in Nigeria Greener. Journal of Agricultural Sciences 8(3), 065-073.
Ezirim, B. C. (2005). Finance Dynamics: Principles, Applications and Techniques. Markowitz Centre for Research and Development. Port Harcourt.
Ezirim, C.B. (2006). Challenges of institutional funds Mobilization and investments: Comparative survey of selected financial institutions in Nigeria, African Economic and Business Review, 4(2).
Flannery Mark J. (1986) Asymmetric Information and risky debt maturity choice. Journal of finance Vol.41.No1
Goldsmith, R. W., (1969). Financial Structure and Development. New Haven: Yale University Press.
Greenwood, J. & Jovanovic, B. (1990). Financial Development, Growth, and the Distribution of Income, Journal of Political Economy, 98, 1076-1107.
Hao. C. (2006). Development of Financial Intermediation and Economic Growth: The Chinese Experience, China Economic Review 17 (4), 347-362.
Harrison, P., Sussman, O & Zeira, J. (1999). Finance and growth: Theory and new evidence. Federal Reserve Board Discussion Paper No. 35.
Hossain, S. A., Islam, M. N., Mahmud, M. S., & Islam, K. A. (2017). Evaluation of Financial Performance of Commercial Banks in Bangladesh: Comparative Study Based on CAMEL Approach. The Millennium University Journal, 2(1), 54-77. Retrieved from http://www.themillenniumuniversity.edu.bd/journal/index.php/TMUJ/article/view/22
Holmstrom, B. & Tirole, J. (1997). Financial Intermediation, Loanable Funds, and the Real Sector. The Quarterly Journal of Economics. 112(3), 663-691.
Islam. M. & Oslam. J. (2011). Development Impact of Non-Bank Financial Intermediaries on Economic Growth in Malaysia: An Empirical Investigation, International Journal of Business and Social Sciences, 2 (14), 187-198.
Islam, K. A., Alam, I., & Al-Amin, D. M. (2015). Foreign exchange operation of private commercial banks in Bangladesh: A case study on AB Bank Limited. International Journal of Innovative Research and Creative Technology, 1(3). Retrieved from http://www.ijirct.org/viewPaper.php?paperId=IJIRCT1201061
Islam, K. A. (2013). Examination of Profitability in Private Commercial Banks in Bangladesh: An Empirical Investigation. Bangladesh Research Foundation Journal, 2(2),29,68-83.
Iwedi, M. & Igbanibo, D. S. (2015). The Nexus between Money Market Operations and Economic Growth in Nigeria: An Empirical Investigation. IIARD International Journal of Banking and Finance Research, 1(2), 1-17.
Iwedi, M. & Onuegbu, O. (2014). Credit Risk and Performance of Selected Deposit Money Banks in Nigeria: An Empirical Investigation. European Journal of Humanities and Social Science. 31(1), 1684 -1694.
IMF. (2001). Theories of Economic Growth – Neo-Classical. Retrieved on April 19, 2010 from www.google.com.
Jayaratne, J. & Strahan, P. (1996). “The Finance-Growth Nexus: Evidence from Bank Branch Deregulation”. Quarterly Journal of Economics, 111:639-670.
Johansen, S. (1991). Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models. Econometrica, Econometric Society, 59(6), 1551-1580.
Jalil, A., Feridun, M., & Ma, Y (2010). Finance-Growth Nexus in China revisited: New Evidence from Pricipal Components and ARDL Bound Tests, International Review of Economics & Finance, 19 (2), 189-195.
Jayaratne. J & Strahan. P. (1996). The Finance-Growth Nexus: Evidence from Bank Branch Deregulation, Quarterly Journal of Economics 111, 639-670.
Jhingan, M. L. (2006). The Economics of Development and Planning (38th Ed). Delhi: Virnda Publication (P) Ltd.
John, E. E. & Terhemba, I. P. (2016). Commercial Bank Credit and Manufacturing Sector Output in Nigeria, Journal of Economics and Sustainable Development; 7(16).
King, R.C. & Levine, R. (1993). Finance, Entrepreneurship and Growth: Theory and Evidence, Journal of Monetary Economics, 32, 513-542.
Korkmaz, S. (2015). Impact of Bank Credits on Economic Growth and Inflation; Journal of Applied Finance & Banking, 5(1), 57-69
Levine, R. (1997) Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature, 35(2), 688-726.
Levine, R., Loayza, N., & Beck,T. (2000). Financial Intermediation and Growth: Causality and Causes. Journal of Monetary Economics, 46, 31-77.
Levine. R. (2005). “Finance and Growth: Theory and Evidence” NBER Working Paper No 10766.
Levine, R., Loayza, N., & Beck, T. (2000). Financial Intermediation and Economic Growth Causes and Causality. Journal of Monetary Economic, 46, 31-77.
Lucas, R. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics. 22, 2-42.
McKinnon, R. (1973). Money and Capital in Economic Development. Washington: The Brooking Institute.
Mattesini, F. (1996). Interest Rate Spreads and Endogenous Growth”. Economic Notes; V.25-#1, pp. 111-129.
Mensah, C. (1999). Bank Credit Provision and performance measurement: The experience of rural Banking in Ghana, Master Thesis.
Modigliani. F. & Miller, M. H. (1958). The Cost of Capital, Corporation Finance and the Theory of Investment, America Economic Review, 48(3).
Nicolas, B. & Lindsay. (2012). Evolution of Banks and Financial Intermediation: Framing the Analysis. Federal Reserve Bank of New York Economic Review, NY.
Nieh C, R. P., Chang, Y. & Hung, K. (2009). The Asymmetric Impact of Financial Intermediaries Development on Economic Growth in Developing Counties. Journal of Economic Studies, 25, 203-222.
Nnamocha, P,N, & Eke N.C. (2015). Bank Credit and Agricultural Output in Nigeria (1970 – 2013): An Error Correction Model (ECM) Approach, British Journal of Economics, Management & Trade 10(2): 1-12.
Nwaogwugwo, I.C. (2008) “Stock Market Development and Economic Growth in Nigeria; The Causal Linkage”. Nigerian Journal of Securities and Finance, 13 (1), 15 – 124.
Nwaeze, C., Michael, O. & Nwabekee, C. E. (2014). Financial Intermediation and Economic Growth in Nigeria (1992 – 2011). The Macrotheme Review, 3(6).
Nzotta, S. M. (2004). Money, Banking and Finance, Theory and Practice. Owerri, Hudson-Jude Nigeria publishers.
Nnanna, O.J. (2004). “Financial Sector Development and Economic Growth in Nigeria: An Empirical Investigation”. Economic and Financial Review. 42 (3): 1-17.
Nnanna, O.J., Eglama & Odoko, F.O. (2004), “Finance, Investment and Growth in Nigeria”. Central Bank of Nigeria, Publications, 2004.
Nwankwo, O. (2013). Agricultural financing in Nigeria: An empirical study of Nigerian agricultural co-operative and rural development bank (NACRDB): 1990 – 2010. Journal of Management Research, 5(2), 28 – 44.
Nwokoro A.N. (2017). An Analysis of Banks’ Credit and Agricultural Output in Nigeria: 1980-2014; International Journal of Innovative Finance and Economics Research 5(1):54-66.
Obilor, S.I. (2013). The Impact of Commercial Banks Credit to Agriculture on Agricultural Development in Nigeria: An Econometric Analysis: International Journal of Business, Humanities and Technology 3(1) January 2013.
Ochejele, J.J. (2007). Economic Analysis. Jos: Ichejum Press.
Odedokun, M.O. (1998) “Financial Intermediation and Economic Growth in Developing Countries” Faculty of Commerce, University of Swaziland, Swaziland.
Okonjo-Iweala N. & Osafo-Kwaako P. (2007): Nigeria’s Economic reforms: Progress and Challenges. Brooklyn Global Economy and Development.
Olofin, S. & Afangideh, Udoma, J. (2008) Financial Structure and Economic Growth in Nigeria, Nigerian Journal of Securities and Finance 13(1) 47-68.
Orji, Anthony (2012) Banking Savings and Bank Credits in Nigeria: Determinants and Impact on Economic Growth: International Journal of Economics and Financial Issues 2 (3) 357-372.
Odedokun. M (1998). Financial Intermediation and Economic Growth in Developing Countries. Journal of Economic Studies, 25, 203-22.
Odhiambo. M (2011), Financial Intermediaries versus Financial Markets: A South African Experience, International Business and Economic Research Journal, 10 (2), 77-84.
Okereke, E.J. (2009). Money and the Nigeria Financial System, Owerri, Alvan Publications.
Okwo, I. M., Mbajiaku B. and *Ugwunta, D. O. (2012). The Effect of Deposit Money Banks Credit on Nigerian Economic Growth; International Journal of Current Research, 4 (12): 555-559.
Omodugo, V.A, Kalu, I.E. and Anowor, O.E. (2013) Financial Intermediation and Private Sector Investment in Nigeria. Research Journal of Finance and Accounting, 4(12):47-54.
Oyatoya E.T.O (1983). An Economic Appraisal of Small Farmers Credit Schemes: A Cost Study of Western Nigeria” Savings and Development Vol. V1l No3
Rajan, Raguram G. & Zingales, Luigi, (1998) “Financial Dependence and Growth”. American Economic Review, 88(3): 559-86.
Robinson, J. (1952). The Generalization of the General Theory in the Rate of Interest and Other Essays. London: MacMillan.
Romeo-Avila, D (2007), Finance and Growth in the EU: New Evidence from the Harmonization of the Banking Industry, Journal of Banking and Finance, 31, 1937-1954.
Romer, Paul (1986). “Increasing Returns and Long-Run Growth”. Journal of Political Economy; V. 94, pp. 1002-1037.
Roubini, Nouriel, & Xavier Sala-i-Martin, (1992). “Financial Repression and Economic Growth”. Journal of Development Economics; V.39-#1, pp. 5-30.
Sanusi J. O. (2002). The importance of Financial Intermediation in Sustaining Economic Growth and Development: The banking Sector Review.
Schumpeter, J. (1934). The Theory of Economic Development. Cambridge: Harvard University Press.
Shaw, E. S. (1973). Financial deepening in Economics Development. Oxford; Oxford University Press.
Shittu A. I. (2012). Financial Intermediation and Economic Growth in Nigeria. British Journal of Arts and Social Sciences, 4(2):164-179.
Soludo C. (2004) Consolidating the Nigerian Banking Industry to meet the Development challenges of the 21st Century> Being an address delivered to the special meeting of the bankers committee held on July 6 at CBN HQ. Abuja.
Sissoko Carolyn (2006) Short-term credit: A monetary channel linking finance to growth: Occidental College (Department of Economics Mimeo
Somoye, R.O.C. (2008), The Performance of commercial banks in post- consolidation period in Nigeria: An empirical review, European Journal of Economics, Finance and Administrative Sciences, ISSN 1450-2275, Issue 14.
Stiglitz Y. (1974) “On the Irrelevance of Corporate Financial Policy”, American Economic Review.
Titman Sheridan (1992) Interest rate swaps and corporate financing choices. Journal of finance Vol 47 No 4.
Udih, M. (2014). Bank credits and agricultural development: Does it promote entrepreneurship performance? International Journal of Business and Social Science, 5(11), 102 – 107.
Udoka C.O., Mbat D.O. & Duke S.B. (2016). The Effect of Commercial Banks’ Credit on Agricultural Production in Nigeria Journal of Finance and Accounting 4(1): 1-10.
Ume, K.E., Obasikene, A.C. Oleka, C.D., Nwadike, A.O. & Okoyeuzu, C. (2017). The Relative Impact of Bank Credit on Manufacturing Sector in Nigeria, International Journal of Economics and Financial Issues, 2017, 7(2), 196-201.
Uremadu, S.O. (2013). Effect of Financial Intermediation and Regulations of Financial Deepening and Growth: Evidence from Nigeria. Nigeria, NGR:
Van Wijnbergen, S. (1982). Interest Rate Management in LDCs Journal of Monetary Economics, 12(3), 433-452.
Von Pischke, J.D. (1991) Finance at the Frontier: Debt Capacity and the Role of Credit in the Private Economy. The World Bank, Washington D.C