IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 11 NO. 5 2025
DOI: 10.56201/ijebm.vol.11.no5.2025.pg49.59

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The Macro-Level Effects of Disaggregated Private Sector Credit on Gross Fixed Capital Formation in Nigeria.

Timiepere Cornelius Ogaga, Charles Ibebi PhD

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Abstract

This is an empirical research that investigated the macro-level effects of disaggregated private sector credit on gross fixed capital formation (GFCF) in Nigeria. Gross fixed capital formation is the cumulative value of investments in physical assets such as infrastructure, equipment, and machinery, which are crucial for economic growth and development. The data were extracted from the apex Bank of the country’s (i.e. Central Bank of Nigeria) statistical bulletins and reports of the National Bureau of Statistics (NBS). This research used annual data for the period 1990-2022. Ordinary least square method (OLS) was employed for estimation of correlation between the dependent variable and the explanatory variables. Augmented dickey fuller to test for stationarity of the time series to avoid spurious regression. The result from the analyses indicated that there is strong evidence to suggest that there is a high correlation between loans and advances to agriculture, forestry and fishery and gross fixed capital formation in Nigeria. Conversely, there is no significant correlation between loans and advances to manufacturing sectors and gross fixed capital formation in Nigeria. Also, Also, there is no significant correlation between the credit provided by commercial banks to small and medium-sized enterprises and the GFCF in Nigeria. The study advises the government to establish policies that enhance access to financial services, including credit, for small-scale farmers, fishers, and forest owners.

keywords:

Capital Formation, Agriculture, Manufacturing, small and medium scale

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