Citation:

Jones, Edith, Olele, Hilda Enoch (PhD). "Financial Deepening and the Manufacturing Sector Performance in Nigeria (1980-2023)" International Research Journal of Economics and Management Studies, Vol. 3, No. 11, pp. 205-220, 2024.

Abstract:

This study is on Nigeria’s financial deepening and manufacturing sector performance from 1980-2023. The specific objectives of this study, therefore, include ascertaining the effect of domestic credit to the private sector on the value added of the manufacturing sector in Nigeria to examine the effect of stock market capitalization on the capacity utilization of the manufacturing sector in Nigeria; and to investigate the relationship between bank deposits and production index in the manufacturing sector. Consequently, three major variables are used as proxies to capture the effect of financial deepening on manufacturing sector performance. These indicators are domestic credit to the private sector, stock market capitalization and bank deposits, while proxy variables for manufacturing sector performance are manufacturing value-added growth, capacity utilization and production index of the manufacturing sector. The study covers the period of 1980 to 2023. The estimation techniques employed in the study are the VAR technique and the Breusch-Godfrey test for long run analysis. The study discovered that financial deepening variables have minimal effect on manufacturing sector performance. This result implies that, although there might be a positive relationship between financial deepening and manufacturing sector performance, the effect of financial variables is not strong or consistent enough to enhance manufacturing activities. Consequently, it is recommended that Nigerian government policies focus on improving access to finance by manufacturing firms, particularly small and medium-sized enterprises (SMEs), and the government should ensure that investment funds are effectively channeled into productive activities.

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Keywords:

Bank Deposit, Capacity Utilization, Domestic Credit To Private Sector, Financial Deepening, Manufacturing Sector Performance, Production Index, Stock Market Capitalization And Value-Added.