ABSTRACT

This study investigates the impact of bank lending on economic growth in Nigeria from 1981-2015, and specifically sought to evaluate the impact of bank lending to the private sector on economic growth in Nigeria. An error correction model was estimated using annual time series data of gross domestic product, credit to the private sector, money supply and interest rate collected from the Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics. The essence was to determine the short run impact of credit to the private sector on economic growth as well as to capture the adjustment towards long run equilibrium. The study established that in the period under review, credit to the privates sector has a negative impact on economic growth in Nigeria. Therefore the study recommends that measures should be put in place to widen the availability as well as accessibility of credit facilities to those who need it most and also ensure that there is sound policy frameworks that will help minimize interest rate to stimulate economic growth, that monetary authorities must ensure that a mechanism for monitoring of credit facilities must be put in place so as to ensure that loans given to individuals are used for the purpose for which it is collected and assist in making more loan-able funds available for investment in the real sectors of the economy.