The Contribution Of Financial Institutions In Nigeria To The Growth Of Manufacturing Industry

The Contribution Of Financial Institutions In Nigeria To The Growth Of Manufacturing Industry

Abstract

This design examined the donation of Financial Institutions in Nigeria to the Growth of Manufacturing Industry. The exploration espousedex-post facto exploration system. Data was principally collected by secondary means through CBN Statistical Bulletin. Data garthered span 2005 to 2014.

Three suppositions were formulated and tested with the used of retrogression analysis and T- test. Grounded on the result of the analysis, the three null suppositions were rejected and the alternate suppositions accepted. It was thereby concluded that; Interest rate has significant impact on manufacturing affair; Bank credit doesn’t have significant impact on the affair of the manufacturing Sector in Nigeria; that bank credit has significant impact on the affair of the manufacturing Sector in Nigeria and there’s significant relationship between manufacturing affair and profitable growth of Nigeria.

Recommendations were proffered to Bank to give credit to the manufacturing sector of the profitable as it’s contributing significantly for the growth of GDP in Nigeria.

Chapter One

Preface

Background To The Study

There has been a growing concern on the decline of the affair of the manufacturing sector in Nigeria in recent times, despite the fact that the government embarked on several strategies aimed at perfecting artificial product and capacity application of the sector. This solicitude is accessible in view of the fact that it has been generally accredited, through the Kaldor’s first law, that manufacturing sector is regarded as the machine of growth of the frugality( Libanio, 2006). The miserable performance of the sector in Nigeria is substantially due to massive importation of finished goods and shy fiscal support for the manufacturing sector, which eventually has contributed to the reduction in capacity application of the manufacturing sector in the country. Enebong( 2003) argued that the position of the Nigerian manufacturing organisations ’ performance will continue to see a decline because as it’s now, the manufacturers will have indeed more problems in assessing raw accoutrements due to stiff competition from the foreign enterprises.

Indeed the fiscal sector reform of the Structural Adjustment Programme( SAP) in 1986, which was meant to correct the structural imbalance in the frugality and liberalize the fiscal systems didn’t achieve the anticipated results. As Edirisuriya( 2008) reported, fiscal sector reforms are anticipated to promote a more effective allocation of coffers and insure that fiscal intermediation occurs as efficiently as possible. This also implies that fiscal sector liberalization brings competition in the fiscal requests, raises interest rate to encourage savings, thereby making finances available for investment, and hence lead to profitable growth( Asamoah, 2008). thus, it’s logical to assume that fiscal liberalization enhances finances rallying and availability, which are needed for enterprises ’ performance and profitable growth.

still, this exploration design has been designed to examine the benefactions of fiscal institutions to the growth of manufacturing assiduity.

Statement Of The Problem

This study was motivated by the challenges pose by the lack of sufficient bank credits to meet the adding requirements in the manufacturing sector of the Nigerian frugality. There’s no iota of mistrustfulness that bank credits is veritably pivotal and essential in revitalizing the manufacturing sector. As important as bank credits is to the sector in malignancy the nonstop policy strategies to attract credits to the sector, utmost Nigerian enterprises have remained monstrous for bank credits For case, as indicated in central Bank of Nigeria( CBN) reports, nearly throughout the nonsupervisory period, marketable bank’s loans and advances to the manufacturing sector swerved persistently from specified minima. likewise, the enhanced fiscal intermediation in the frugality following the fiscal reforms of the 1990s notwithstanding, credits to manufacturing as a proportion of total banking credits has not bettered significantly comprising15.7 percent between 1990 and 1994 and25.8 between 1995 and 2000. Accordingly, numerous manufacturing enterprises in the country have continue to calculate heavily on internally generated finances, which have tended to limit their compass of operating.

The below problems can be epitomized as follows;

High interest rate on Bank lending to the manufacturing sector.

fiscal institutions haven’t played vital part in revitalizing the manufacturing sector. The affair of the manufacturing Sector has in Nigeria?

The profitable impact of the manufacturing assiduity isn’t felt has most products are still imported into the country for consumption

Ideal Of The Study

The main ideal of this study is to examine the donation of fiscal institutions in Nigeria to the growth of manufacturing assiduity. still, other specific objects include

Examining the impact of interest rate on manufacturing affair of the manufacturing sector

To assess the impact of bank credit on the affair of the manufacturing sector in Nigeria.

To assert the relationship between manufacturing affair and profitable growth of Nigeria

Exploration Questions

In order to achieve the purpose of this exploration study, the study will essay to give answers to the following exploration questions.

How does interest rate impact the manufacturing affair of the manufacturing sector?

To what extent does bank credit impact the affair of the manufacturing Sector in Nigeria?

What’s the extent of the relationship between manufacturing affair and profitable growth of Nigeria

Statement Of Exploration Suppositions

thesis is a conditional answer to a exploration question. It’s a academic statement about the relationship that live between two or further variables which needs to be tested empirically before they can be accepted or rejected. To give answer to the exploration questions arising from this study, the following suppositions are supposed.

thesis One

Ho Interest rate doesn’t have significant impact on manufacturing affair

H1 Interest rate does has significant impact on manufacturing affair

thesis Two

Ho Bank credit doesn’t have significant impact on the affair of the manufacturing Sector in Nigeria

H1 Bank credit has significant impact on the affair of the manufacturing Sector in Nigeria

thesis Three

Ho There’s no significant relationship between manufacturing affair and profitable growth of Nigeria

H1 There’s significant relationship between manufacturing affair and profitable growth of Nigeria

Significance Of The Study

This exploration work tends to examine the donation of fiscal institutions to the growth of manufacturing assiduity. An perceptivity on the empirical relationship between fiscal sector reforms and manufacturing affair, can help the government in formulating accommodating programs to enhance artificial product and profitable growth.

The study contributes to knowledge in three ways First, it reveals the current situation of manufacturing sector in Nigeria. Second, the link between manufacturing affair and profitable growth will also be established. Eventually, the determinants of manufacturing affair will be linked. therefore, the applicable policy towards accelerating growth through manufacturing sector can be formulated and enforced.

Compass Of The Study

This exploration work is to examine the donation of fiscal institutions to the growth of manufacturing assiduity. The compass of the study is the entire manufacturing sector of Nigeria frugality in large. The geographical position of the exploration in Nigeria. The study covers data for period 2005 – 2014. The association of the exploration is Nigeria BreweriesPlc.

The sample size would be limited to one hundred which will be drawn from the population. The simple slice fashion will be used in drawing the sample.

Limitations Of The Study

In the course of conducting this exploration work it’s anticipated that the following will constitute impediments to the effective conduct of the study

Access to Data incapability to pierce applicable information is a previsioned challenge to the success of this exploration. The duty authourity may not reveal data or a true information which they which they may choose to keep for themselves.

Time Constraint this study would have choose to cover a larger compass to consider the thirty- six state duty authority which would yield a further dependable result but due to the limited time available, the compass is limited to Lagos State duty authority.

High cost of running a large area Also the fiscal recrimination of covering the entire nation could be a dilemma to the success of this exploration.

nonetheless, I believe the below limitations will in no way affect the trustability and validity of the exploration study.

Operationalization Of Variables

In testing the validity of the formerly stated thesis, this model will be used; manufacturing affair is a function of marketable banks and interest rate. Mathematically this can be expressed as

Moutput = f( COML, IR)

Where

Moutput = manufacturing affair

Coml = marketable bank loans

IR = marketable bank interest rate

The ordinary least square model is grounded on the following function.

Moutput = b0 b1COML b2IR U

Moutput = Dependent variable

COML, IR = Independent variables

b0 = Retrogression constant

b1, b2 = Unknown parameters or portions

U = stochastic error

Description Of Terms

BANKING SYSTEM a network of marketable, savings, and specialized banks that give fiscal services, including accepting deposits and furnishing loans and credit, plutocrat transmission, and investment installations

FINANCIAL CONTAGION A situation in which a faltering frugality in one country causes else healthy husbandry in other countries to have problems.

INTERBANK The fiscal system and trading of currencies among banks and fiscal institutions, banning retail investors and lower trading parties

GLOBAL Frugality The transnational spread of capitalism especially in recent decades, across public boundaries and with minimum restrictions by governments.

FINANCIAL INSTITUTIONS An association, which may be either for- profit ornon-profit that takes plutocrat from guests and places it in any of a variety of investment vehicles for the benefit of both the customer and the association

LIBERALIZATION The junking or reduction of restrictions or walls on the free exchange of goods between nations.

COMMERCIAL BANK A fiscal institution that provides services similar as accepting deposits and giving business loans.

mortal CAPITAL The set of chops which an hand acquires on the job, through training and experience and which increase the hand’s value in the business.

plutocrat request A member of the fiscal request in which fiscal instruments with high liquidity and veritably short majorities are traded

BOND request The terrain in which the allocation and trading of debt securities occurs

EQUITY request The request in which shares are issued and traded, either through exchanges or untoward requests.

RELATIONSHIP BANKING A banking gospel that aims to establish long- term connections with guests and reduce the client’s desire to go away for banking services.