Impact of Bank Credit on the Real Sector : Evidence from Nigeria

The paper examines the impact of bank credit to output growth in the manufacturing and agricultural sub sectors of the economy over the period 1980-2010. Using the error correction modeling techniques, the results show that bank credit has significant impact on manufacturing output growth both in the short run and long run but not in the agricultural sub sector. Inflation and exchange rate depreciation have negative effects on manufacturing output growth in both short run and long run. To boost output growth in the real sector, more bank credit should be made available to the real sector especially the manufacturing sector. Also, inflation should be kept low while the value of the domestic currency should be strengthened