The Contribution of the Nigerian Banks to the Promotion of Non-Oil Exports (1990-2013)

Abstract

This study examines the contribution of the Nigerian banks to the promotion of non-oil exports. This study adopted econometric time series analysis to examine the contribution of Nigerian banks credit in relation to non-oil exports performance, assess the presence of causal relationship between Nigerian banks credit and non-oil exports performance as well as the direction of the causal relationship. The empirical analyses that were carried out to achieve the objectives include unit root, co-integration and granger causality test, in which changes in non-oil exports performance was regressed against commercial banks credit to non-oil exports, interest rate and inflation using annual series data for the period 1990-2013. The data were sourced from the Central Bank of Nigeria statistical bulletin. The result of the analysis showed that Nigerian banks have not adequately contributed toward the promotion of non-oil exports. The study also found that there is a long run relationship between Nigerian banks credit to non-oil exports and the performance of non-oil exports and no causality between Nigerian banks credit to non-oil exports and non-oil exports performance. Based on the findings, the Central Bank of Nigeria should reduce the current monetary policy rate of 14% to a range of 5%-8% so that when commercial banks add up processing, transaction and other administrative fees, credit would be extended to non-oil exporters at a rate lower than 15%. Furthermore, the Central Bank of Nigeria should as an operational guideline, impose commercial banks to set aside a certain amount of money from their yearly profit for financing of non-oil export as it is the case for small and medium scale enterprises equity scheme.