Abstract:
Financial systems have long been recognized to play an important role in economic and this is because they play a key role in the mobilization and allocation of savings for real sector growth. However, over the years, instead of progressive performance of the real sector, it has retrogressed to an unimaginable proportion. The study is embarked upon to examine the effect of real sector financing on economic growth in Nigeria from 1986-2017. Ex-post facto research design was adopted by the study; while ordinary least square (OLS) regression technique was utilized in the empirical analysis. Pre-estimation test was carried out on each of the variable to avoid spurious regression results. Co-integration results revealed that long-run equilibrium relationship exist between real sector financing and economic growth in Nigeria. Findings from the study revealed that finance to manufacturing sector have a significant impact of economic growth in Nigeria. More so, it was discovered from the analysis that Agricultural Sector Finance has indeed significantly Influenced Economic growth. Based on these findings, the study recommends that the monetary authority should seek out ways to reduce increase money supply (credit) to sectors such as manufacturing which deposit money banks often time find it difficult to extend credit to. Commercial banks should be encouraged to sustain their lending to agricultural sector as a priority sector. This can be enhanced by relaxing some of their lending conditions. Such lending should take into consideration the long gestation period associated with agricultural production.
