ABSTRACT

This thesis investigated the effect of commercial banks' lending on the economy of Nigeria for the period 1986 to 2017. The study was necessitated by the recognition that bank loans to the private sector are a very important avenue to economic growth. In order to achieve the objectives of the study, seven hypotheses were proposed and data collected from the CBN statistical Bulletin (2018). Data collected include those on bank lending to agriculture, manufacturing, mining and quarrying, export, production, trade and commerce and services sectors.Data analysiswas conducted using Auto-Regressive Distributed Lag, Co-integration and Granger Causality methods of analysis. However, the data was first tested for unit root using ADF and Phillip Perron methods.The findings showed among other things that: commercial banks' lending to the manufacturing, production, trade and commerce and services all had positive impact on the economy. However none of the lot was statistically significant in their impact on the economy. Commercial banks' lending to agriculture, mining and quarrying and export sector(s) had negative impact on the economy. Based on the findings, it was concluded that: commercial Banks' loans to the manufacturing, mining and quarrying, production and services sector(s) is not enough to have the desired effect on the economy. It was also concluded that bank loans to the agriculture and export sector(s) affect the economy negatively. Based on the conclusions, it is recommended that: Regulators and policy makers should focus more attention on other sectors of the economy which has been proven to have the capacity to promote economic growth like agriculture, manufacturing and services and mining and quarrying.