ASSESSMENT OF LENDING INTEREST RATE ON THE GROWTH OF MANUFACTURING SECTOR IN NIGERIA: 1986 - 2015

Abstract

Over the years Nigeria Economy has been on growing path with the largest GDP in Africa. But the contribution of manufacturing sector is little due to some lingering challenges such as poor and decayed infrastructure, corruption, insecurity, government policies, and high interest rate. This study examines effect of lending interest rate on the growth of manufacturing sector in Nigeria from 1986 - 2015 using Autoregressive Distributive Lag Model (ARDL). The result illustrate negative and significant relationship between lending interest rate and the growth of manufacturing sector in Nigeria. Based on this findings, the researcher recommends that central Bank of Nigeria (CBN) should maintain the monetary policy rate at a level low than the current 11 percent enough to bring down the rate at which deposit money banks lend to their client and fixed decay infrastructure to economic growth and development.