THE IMPACT OF HIGH BANK LENDING ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY

ABSTRACT

In all nations, the manufacturing sector is the life wire of economy of a nation development. Manufacturing is also a nation Describe as transformation of raw materials into finish goods which can export to other nations whereby earning or improving our foreign exchange reserve.

The study investigated the impact of high bank lending rate on manufacturing sector of the Nigeria economy. The research discovered that there is no positive relationship between high cost of funds and capacity utilization. It also that the firms due to the high bank lending or repair obsolete machines or service it.

Data for this study was collected through secondary sources. Which were from journals and textbooks. Based on findings of the researcher is able to study such as:

–                     The government should make mandatory policies requiring banks to lead to manufacturing firms at a lower rate.

–                      Banker customer relationship in Nigeria should be highly improved to restore the customer confidence in the banking systems.

–                     The federal government with urgency should do all to salvage the naria value.

TABLE OF CONTENT

TITLE PAGE                                                                          II

APPROVAL                                                                           III

DEDICATION                                                                        IV

ACKNOWLEDGEMENT                                                      V

ABSTRACT                                                                           VII

TABLE OF CONTENT                                                                   VIII

CHAPTER ONE

1.0       INTRODUCTION                                                                  1

1.1       BACKGROUND OF THE STUDY                             1

1.2       STATEMENT OF THE STUDY                                 3

1.3       OBJECTIVE/PURPOSE OF THE STUDY               4

1.4       SCOPE/LIMITATION OF THE STUDY                     6

CHAPTER TWO

REVIEW OF RELATED LITERATURE                              9

2.1       INTEREST RATE                                                        10

2.2       IMPORTANT OF INTEREST RATE                          11

2.3       DETERMINANT OF INTEREST RATE                    12

2.4       THE EFFECT OF INTEREST RATE ON BANKS   15

2.5       THE ROLE OF MANUFACTURING SECTOR IN THE ECONOMY DEVELOPMENT OF NIGERIA               17

2.6       CONSIDERATIONS IN DETER MING A BANK LENDING POLICY                                                                    18

CHAPTER THREE

RESEARCH DESIGN AND METHODOLOGY                           22

3.1       SOURCE OF DATA (SECONDARY ONLY)            22

3.2       LOCATION OF DATA                                                 23

3.3       METHOD OF DATA COLLECTION

CHAPTER FOUR

FINDING                                                                                25

CHAPTER FIVE

RECOMMENDATION AND CONCLUSION                      27

5.1       RECOMMENDATION                                                 27

5.2       CONCLUSION                                                             29

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Over the year, Nigeria government has been making series of effort attaining a highly industrialized self-reliant economy. These efforts have been due to the obvious realization by the government of the important of industrialization in economic development of economy and so the importance of manufacturing sector of Nigerian economy cannot be over-emphasized. The sector only provides the finished good, which we need but for lack of which we look abroad foreign exchange through exportation of its products.

Before 1980 when oil (back gold) was first discovered in river state, agriculture was the major foreign exchange earner in Nigeria. But with the high oil production in the early 70’s. agriculture started losing important in the economy and since then up fill date the oil sector was remain the major foreign exchange earner for Nigeria. The oil boom of the early 70’s however contributed to a large extent to the growth of industries in the country. Certainly, it was after taken the post war era that the Nigerian government starts taken measures to boost. Agriculture as a supplement to the growth and development of the manufacturing industries as well as the economy. Important among these was the joint ownership of industries between the government and foreign firms. But perhaps the most significant of all was the indigenization principle introduce by Yakubu Gowon government in 1972. The concept was to exclusively reserve some business for Nigeria or increase their participation. But this policy was however, poorly managed as some foreigners used Nigeria as front in an effort to evade regulation.

One of the major ways through which manufacturing firm can be encouraged is through availability of finance for their operation. In Nigeria today finance seem to be or it’s the hardest thing to obtain as a result of several variables of which one of the most important is the ever-increasing rate of interest.

According to Nwachukwu (1993:20). This states of affairs is lamentable as manufacturing offers by for the best potential of the country. It was the potential for growth. It could be the fastest growing sector of the economy, but with problem that the ministry has to contend with the under capacity utilization, the counting is simply not read, to export and so it high time the industries, the government, the citizen in general developed a concentrated effort aimed at normalizing the pathetic state of affairs.

1.2       STATEMENT OF THE PROBLEM

One cannot be find various views regarding or concerning the impact of high banks lending rate on manufacturing firm.

The major task of this research in therefore a critical analysis of the impact of high banks lending rates to see how they have affected the manufacturing say sector.