AN EMPIRICAL ANALYSIS OF THE IMPACT OF BANK MONEY DEPOSITS ON THE MANUFACTURING SECTOR IN
This research study, by means of a robust statistical analysis investigates the impact of deposit money bank on the manufacturing sector in Nigeria. Data from 1980-2012 were examined. The empirical analysis carried out showed that the lag of exchange and commercial bank credit have a significant and positive impact on manufacturing sector in Nigeria within the period under review, and as such the monetary and capital market in Nigeria should be further developed to meet standards and provide the necessary capital for the manufacturing sector. Also the government and relevant authorities should see to the strengthening of the exchange rate.
1.1. BACKGROUND OF THE STUDY
Manufacturing is the capacity to produce goods with labour, materials and inputs produced by others. Simple forms of manufacturing have characterized all organised societies but the application of steam power to production in Britain in the late eighteenth and early nineteenth centuries significantly increased the capacity for production, and since this first industrial revolution, economic progress has in many peoples minds been linked with the capacity to produce and trade in manufactured products. Manufactures now dominate world trade and typically are around 80 percent of world exports in any year with developing accounting for nearly one- third of this. In the bulk of developing countries, outside the LDCs and the oil rich states, manufacturers account for a majority of export revenue. In terms of regional distribution, the bulk of developing country manufactured exports come from East Asia (70 percent in 2005) with approximately 40 percent of those from
china. Export data are also available by product category gives developing country and regional shares is manufactured exports by selected types of product. It shows developing countries as a group taking more than 50 percent of world exports in the labour intensive, simple technology categories of textiles, footwear and leather. The banking sector in Nigeria in 2006 financial year was oligopolistic in structure as only ten banks 11.1% of the 90 operation accounted for 54.5% of total assets, 52.4% of total deposit liabilities and 46.1% of total deposit liabilities of deposit money bank as at 31/12/2006 amounted to #2,705 billion. Whilst aggregate credit to the domestic economy amounted to #1,302.2 billion. In 2006, sectoral allocation of deposit money banks credit continued to favour the less productive sector of the economy as only 40.9% of the total credit went to agriculture, solid minerals, exports and manufacturing down from 46.2% in 2001. In the year 2007, the general performance of banks was not significantly different from what happened in the previous year. Ten banks out of the 89 in operations accounted for 55.3% of total credit. At 3,047.9 billion, the aggregate assets, the level as at Dec 31 2006. The manufacturing sector or service enterprise with capital investment exceeding #950,000 in machinery and equipment. The importance of manufacturing sector in the promotion of economic development has always been at the front developing strategies. More so, Nigeria like other developing nations adopted the use of import substitution policy as a means of manufacturing. This aims of producing domestic consumer goods in those industries. Major functions of Nigeria deposit money banks Acceptance and sa