ABSTRACT

The objective of this study is to examine the impact of commercial bank loans on economic Growth in Nigeria from 1981-2015. The study made use of secondary data sourced from the Central Bank of Nigeria statistical bulletin and National Bureau of statistics from 1981-2015. Dependent variable for this study is Gross Domestic Product (GDP) and explanatory variables are commercial bank loans to key sectors like Manufacturing, Agriculture and Mining and Quarrying sector. Using Ordinary least square method (OLS) multiple regression techniques, the study revealed that there exist a stable long-run relationship between commercial bank loans and economic growth in Nigeria. The study also revealed that credit to Agricultural and Manufacturing sector has a positive impact on the Gross Domestic Product (GDP) while credit to Mining and Quarrying has a negative impact on the Gross Domestic Product in Nigeria. The study, therefore recommended that Government should concentrate more in formulating long-term credit policies which has the capacity to stimulate economic growth in Nigeria. More credit should be channeled to the Agricultural and Manufacturing sectors of the economy as it was shown on our findings to significantly contribute to economic growth in Nigeria.