Banking sector reforms and output growth of manufacturing sector in Nigeria (1970-2011)
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Date
2015-08-31
Journal Title
Journal ISSN
Volume Title
Publisher
Academic Journals
Abstract
The study investigated empirically the effect of banking sector reforms on the output of manufacturing
sector in the Nigerian economy between 1970 and 2011 with a view to examining the extent of the
impact of banking sector reforms on the manufacturing sector. The study employed annual secondary
time series data from 1970-2011, sourced from the Central Bank of Nigeria’s statistical bulletin and
annual report and statement of accounts, National Bureau of Statistics final accounts and IMF
International Financial Statistics (IFS) using the methodology of Cointegration analysis and Error
Correction Mechanism (ECM). The empirical results showed that the effects of Bank assets, Lending
rate, Exchange rate and real rate of interest on manufacturing output were positively significant but
with very low impact. On the other hand, the financial deepening and interest rate spread negatively and
significantly impacted on the output growth of manufacturing sector in Nigeria. Overall, the conclusion
that emerged from the findings suggests that the effects of banking sector reforms on the output
growth of manufacturing sector were significantly low in the Nigerian economy. However, the findings
indicated that the impacts of the various banking reforms could vary widely on the economy depending
on the time lags involved. Consequently, the policymakers must be prepared to initiate proper countercyclical banking reforms that will serve as buffer measures to lessen or abort the negative impacts of
any banking reforms on the manufacturing output growth. Thus a flexible accommodating banking
reform regime is advocated for Nigeria.
Description
Keywords
Banking sector reforms, Error Correction Mechanism (ECM), Manufacturing sector, Cointegration analysis
Citation
Olanrewaju, O. G., Aremo, A. G., & Oladipo, A. O. (2015). Banking sector reforms and output growth of manufacturing sector in Nigeria (1970-2011). Journal of Economics and International Finance, 7(8), 183-191.