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ABSTRACT
The real sector is a strategic component of an economy because it produces and distributes tangible goods and services required to satisfy aggregate demand in the economy. For this reason, there is the need for adequate credit flow from the banking industry to the real sector, which in the Nigerian case; the credit flow has been grossly inadequate. This study is carried out to examine the impact of private sector credit (FSC) on the performance of the manufacturing sector of Nigeria with a view to assess the significant contribution of (PSC)to manufacturing sector growth in Nigeria. The study used aggregate time series data from 2011 to 2018, which was drawn from central bank of Nigeria (CBN,) statistical bulletin, CBN Annual Report and National Bureau of Statistics (NBS) Statement of Accounts. The data was analyzed using various statistical tools including the GARCH analysis to analyze volatility in private sector credit and the error correction mechanism and based on the t- statistics, the study revealed a 2.5 unit increase in gross domestic product as a result of a unit change in private sector credit (PSC). The study therefore concludes that there is a statistically significant impact of credit to private sector on the manufacturing sector of Nigeria. This, suggest that the performance of the manufacturing sector is greatly influence by credit to private sector. The study recommends that the federal government of Nigeria through the central bank of Nigeria (CBN) and other financial intermediaries should enhance the financing of the manufacturing sector through improved credit flow to the private investors. This will facilitate the strategic importance of the sector in creating and generating growth of the economy.
