Bank Credit and Performance of Economic Growth: Evaluation of Nigerian Experience (2000-2023)

Abstract

This research investigated the bank credit and the performance of economic growth in Nigeria. The specific objectives were to; examine the influence of business loans on Gross Domestic Product (GDP) of Nigeria; determine the influence of personal loan on unemployment reduction in Nigeria; and to evaluate the influence of agricultural loans on economic growth of Nigeria. The study adopted ex post facto research design and employed the ordinary least squares (OLS) regression technique to analyze the data. The major findings of the study were as follows: with an R-squared value of 0.8407, business loans have a significant positive effect on Gross Domestic Product (GDP) of Nigeria; with an R-squared value of 0.8796, personal loan have a significant positive effect on unemployment reduction in Nigeria; and with an Rsquared value of 0.7020, agricultural loans contribute significantly to economic growth of Nigeria. Specifically, the analysis shows that business and agricultural loans have a positive and meaningful effect on GDP, indicating that productive lending contributes to output expansion. Similarly, personal loans were found to play a significant role in reducing unemployment, indicating that access to credit supports individual-level economic engagement, either through consumption smoothing or small-scale enterprise creation. On the basis of the findings and conclusion drawn, it was recommended among others that Government and financial institutions should strengthen credit support for small and mediumsized enterprises (SMEs) through affordable and well-structured business loan schemes. Since business loans have shown a positive influence on GDP, improving access to such credit can boost production capacity, stimulate innovation, and drive economic growth.