LENDING RATE AND MANUFACTURING SECTOR GROWTH IN NIGERIA

Abstract

This study examined the impact of lending rate on the growth of manufacturing sector in Nigeria from 1986 to 2020. The Ordinary Least Squares (OLS) estimation technique was employed for achieving the objectives of the study. The OLS analysis showed that there exists a positive and insignificant impact of lending rate on the growth of the manufacturing sector in Nigeria, indicating that lending rate does not impede the activities and the performances of the Nigerian manufacturing sector. It also revealed that there exists a negative and insignificant impact of inflation rate on the growth of the manufacturing sector in Nigeria. Based on the findings, the study recommended that Central Bank of Nigeria through its monetary policy should ensure that interest rate deregulation is frequently monitored and primarily tailored towards ensuring that the prevailing market lending rate provides opportunity for improved performance of the manufacturing sector, government should provide the essential and effective infrastructure facilities especially electricity supply, as the high cost of these infrastructural expenditure incurred by banks is passed on to borrowers and manufacturers through interest rate, among others were proffered.