CREDIT TO THE PRIVATE SECTOR AND ECONOMIC GROWTH IN THE PRESENT TECHNOLOGICAL WORLD: EMPIRICAL EVIDENCE FROM NIGERIA

In the present technological world, an online real-time technology is needed to facilitate credit to the private sector. Absence of continuous credit to the private sector has hindered sustainable development in developing countries such as Nigeria. This study therefore empirically examined the impact of credit to the private sector on economic growth in the present technological world in Nigeria using time series data from the period of 1986 to 2016. Dependent variable was GDP growth rate (GROWTH), as proxy for Economic Growth. Credit to the Private Sector (PSCR) was the main explanatory variable, while other explanatory variables were; Broad Money Supply (M2), Real Interest Rate (RINT), Labour Rate (LABR), Gross Fixed Capital Formation (GFCF). Augmented Dickey Fuller (ADF) unit root test was used to test for the stationarity properties and order of integration of the data used in the study, the result revealed that Real interest rate was stationary at levels, while all other variables were found to be stationary at their first difference. The Vector Autoregressive (VAR) econometric technique of estimation was employed to detect the effect of Credit to the Private Sector on complete time path of Nigerian economic growth and vice versa. Research findings revealed that the response of GROWTH to most of the shocks (impulses) were positive except for Interest Rate while GROWTH appeared to be unresponsive to the Interest Rate shocks. Under the Credit to the Private Sector bloc, the first 2 lags of PSCR being significant at the 5 percent and 1 percent level respectively are found to be significant predictors of the dependent variable (PSCR). Furthermore, the estimation result shows that factors like LABF (the three lags) and RINT (third lag) are equally significant determinants of PSCR.The study therefore recommends that government should increase credit to the private sector to boost the sector so that banks and other financial institutions can increase lending to the Nigerian economy