INDUSTRIAL PERFORMANCE

This study examines the impact of fiscal and financial policies on industrial performance in Nigeria over the period 1981 to 2023, drawing on endogenous growth theory, which emphasises the role of policy-driven capital accumulation, technological progress, and productivity in sustaining long-term economic growth. Specifically, the study investigates the effects of government expenditure and financial depth on industrial output, recognising that effective government intervention and a well-functioning financial system can generate growth-enhancing externalities. The Autoregressive Distributed Lag (ARDL) model is employed to capture both short-run and long-run dynamics. The empirical results reveal that government expenditure exerts a positive and statistically significant effect on industrial performance in both the short run and long run, supporting the endogenous growth proposition that productive public investment stimulates sustained industrial growth. In contrast, credit to the private sector, used as a measure of financial depth, has a negative and statistically significant effect, suggesting inefficiencies in the allocation of financial resources to the industrial sector. Inflation is found to have an insignificant effect on industrial performance. The ARDL bounds test confirms the existence of a stable long-run relationship among fiscal policy, financial policy, inflation, and industrial performance. Based on these findings, the study recommends strengthening productivity-oriented government expenditure, particularly in industrial infrastructure, alongside reforms in the financial sector to improve the effectiveness of private sector credit in supporting industrial activities. It further emphasises the need for coordinated and long-term fiscal and financial policy frameworks to promote sustainable industrial growth in Nigeria.