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Abstract:
The study investigated the Impact of sectoral distribution of Commercial banks' loans and advances on economic growth in Nigeria for the period of 1986 - 2014. Time series data on commercial banks' loans and advances to Manufacturing sector (CMAN, representing Production sector), commercial banks' loans and advances to Export sector (CEXP, representing General Commerce sector) and commercial banks' loans and advances to Transport and Communication sector (CTC, representing Service sector) was used to capture sectoral distribution of commercial banks' loans and advances to different sectors of the economy, while Real Gross Domestic Product (RGDP) was used to capture economic growth. The techniques of estimation employed in the study include Augmented Dickey Fuller (ADF) test, Johansen Co-integration, Error Correction Mechanism (ECM) and Granger causality test. The result showed that commercial banks' loans and advances to only Transport and Communication sector has a significant impact and is positively related to economic growth, while commercial banks' loans and advances to Manufacturing and Export sector has no significant impact and were negatively related to economic growth. The Granger causality test revealed no causality between CMAN, CEXP and RGDP, while there is a unidirectional causality between RGDP and CTC. Based on the result, it was recommended that, Commercial Banks' should increase their loan to manufacturing and export sector in order to boost our gross domestic product.
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