An Analysis of the Impact of Sectoral Allocation of Deposit Money Bank’s Credit on Manufacturing Sec

Between 1981 and 2019, descriptive statistics, the Phillips-Perron unit root test, the cointegration test, and an error correction mechanism were used to investigate the impact of Deposit Money Bank (DMB) loans on manufacturing sector performance in Nigeria. All of the variables are stationary at first difference, according to the unit root test results. The Johansen cointegration test revealed that the variables had a long-term relationship. This sets the stage for the error correction model to be fitted. The prudent ECM results demonstrated that deposit money banks' loan to the manufacturing sector had a favourable impact on the manufacturing sector's performance. This means that increased credit from deposit money banks boosted output in the industry. It was also discovered that the interest rate played a substantial role in explaining fluctuations in the industrial sector's production. This emphasises the importance of cost of funds in investment decisions and overall economic success. The rate of inflation played a role in explaining fluctuations in the manufacturing sector's performance. The study concluded that, in order to promote output and economic growth in the country, banks should expand their funding to manufacturing sector enterprises.

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