BANKING SECTOR CREDIT AND ECONOMIC GROWTH IN NIGERIA

This study investigates the impact of bank credit on economic growth in Nigeria applying the multivariate ordinary least square (OLS) technique using time series data from 1981 to 2020. Real gross domestic product (RGDP) is the dependent variable and proxy for economic growth while bank credit to the private sector (PSC) and aggregate bank credit (ABKC) were proxies for bank credit respectively. A major finding is that there is a significant negative relationship between bank private sector and economic growth while a significant positive relationship was found between aggregate bank credit and economic growth. Inflation rate and trade openness were found not to be a key factor that influence economic growth in Nigeria for the period studied. The study recommends that government should ensure strict regulatory measures through the use of its monetary policies to regulate the banking sector. The Central Bank of Nigeria, through the use of its credit control instruments should regulate the interest rates to enable the private sector borrow at a moderate rate thereby enhancing investment, which in turn leads to economic growth. Also, the monetary authorities and other financial institutions should be strengthened in their regulatory frame work and capacity to maintain financial stability and banking sector reforms.