Economic and Financial Review


Central Bank of Nigeria


Industrial Output, Credit, Interest Rate, Gross Domestic Product


This paper re-examines the relationship between finance and industrial growth in Nigeria by including aggregate credit to the industrial sector and financial development index as additional variables into the industrial growth model. Using data spanning the last four decades, we apply the Autoregressive Distributed Lag (ARDL) bounds testing approach to estimate an industrial growth model that accounts for the role of finance-related variables, while also controlling for the impact of electricity consumption and structural breaks. The key findings in the study are threefold. First, our results confirm that finance is a significant driver of industrial growth in Nigeria. Second, the use of aggregate credit to the private sector in an industrial growth model tends to underestimate the impact of finance on industrial performance in the long-run, compared with the use of a sector-specific measure such as aggregate credit to the industrial sector. Third, accounting for structural breaks provides a higher long-run estimate for the impact of aggregate credit on the industrial sector. These results highlight the need to cautiously interpret results of industrial growth models that fail to (i) incorporate sector-specific credit, and (ii) account for structural breaks. To accelerate industrial growth in Nigeria, it is vital to sustain policies aimed at expanding credit to the industrial sector, such as the minimum Loan-to-Deposit ratio initiative.

Author Bio

The Authors are staff of the Central Bank of Nigeria

Publication Title

Economic and Financial Review (EFR)





First Page


Last Page



L11, E51, E43, F43

Recommended Citation

Udeaja, E. A., Akanni, E. O., & Offum, P. F. (2021) Revisiting the Finance and Industrial Growth Nexus in Nigeria, CBN Economic and Financial Review (EFR), 59(2), 1-22.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.