Driving private sector credit in Nigeria: The role of growth finance

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There is some level of uncertainty as to whether private sector credit interacts with finance sources for growth to significantly influence channeling funds for investible purposes in Nigeria, given the nation’s unique characteristics. This study examines the role of various sources of growth finance on private sector credit in Nigeria. For this purpose, the study utilizes secondary data (1980–2018) sourced from CBN statistical annual reports. The study further employs the ARDL-Bounds Co-integration test to test out the hypothesis after stationarity testing. The study finds that stock market capitalization had a positive and significant influence on private sector credit compared to remittance inflows and gross domestic savings in the long run among the sources of growth finance indicators. Furthermore, remittance inflows reported a positive but statistically insignificant relationship, while gross domestic savings had a negative and insignificant coefficient. The study concludes that only stock market development inflow transmits to the private sector’s credit at 10 percent among the various growth finance sources.

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    • Figure 1. CUSUM stability test
    • Figure 2. CUSUMSQ stability test
    • Table 1. Variable description
    • Table 2. Stationarity test results
    • Table 3. ARDL bounds co-integration test for credit to private sector and finance for growth indicators
    • Table 4. ARDL model for credit to private sector and growth finance indicators
    • Table 5. Long-run coefficients for private sector credit and growth finance indicators
    • Table 6. Serial correlation test for private sector credit and growth finance
    • Conceptualization
      Bello Hassan
    • Formal Analysis
      Bello Hassan
    • Investigation
      Bello Hassan
    • Writing – original draft
      Bello Hassan
    • Project administration
      Evans Osabuohien, Folorunso Ayadi, Jeremiah Ejemeyovwi
    • Supervision
      Evans Osabuohien, Folorunso Ayadi
    • Validation
      Evans Osabuohien, Jeremiah Ejemeyovwi
    • Writing – review & editing
      Evans Osabuohien, Folorunso Ayadi, Jeremiah Ejemeyovwi, Victoria Okafor
    • Resources
      Folorunso Ayadi
    • Visualization
      Jeremiah Ejemeyovwi, Victoria Okafor
    • Methodology
      Victoria Okafor
    • Software
      Victoria Okafor