Nexus between Microfinance Bank Lending and Economic Growth in Nigeria

Takon Samuel Manyo; Ugah John

doi:10.63922/ijebir.v4i04.2090

Takon Samuel Manyo Department of Banking and FinanceFaculty of Administration and Management Sciences University of Calabar, Calabar.
Ugah John Department of Banking and Finance Faculty of Administration and Management Sciences University of Calabar, Calabar.

DOI: https://doi.org/10.63922/ijebir.v4i04.2090

Keywords: economic growth, MSMEs, microcredit, lending rate, OLS.

Abstract

This study examined the impact of microfinance bank lending on economic growth in Nigeria, using time series data from 2008 to 2020. Secondary data on the variables were extracted from the Central Bank of Nigeria Statistical Bulletin for the period under study. Given that the data is time series in nature, the study employed the Ordinary Least Squares (OLS) analysis to obtain the estimates of the parameters of the economic relationship from statistical observations. From the statistical computation, analyses, and findings of the test carried out, it was discovered that the joint action of MFBs’ credit to small and medium scale enterprises and MFBs lending rate has a significant impact on economic growth in Nigeria, while MFBs’ contributions to agricultural production exerted an insignificant impact on economic growth. The findings, however, reinforce the fact that MFBs contributions to agricultural production positively impacted economic growth, and MFBs’ lending rate showed a negative impact on economic growth in Nigeria. Based on the findings, it was recommended that there is a need for the monetary authorities to control the country’s MFBs lending rates, and the CBN should co-operate with microfinance institutions in administering microcredit to SMEs at subsidized interest rates so as to promote economic growth in the country.

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