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The non-oil sectors play a crucial role in driving industrial transformation and generating foreign exchange for a nation. Therefore, the performance of this sector is influenced by the implementation of policies and programs, as well as the availability of credit facilities from deposit money banks (DMBs). This study examines the relationship between DMBs' credit and non-oil exports in Nigeria from 1986 to 2022. The data is analysed using the bounds test co-integration procedure of Autoregressive Distributed Lag (ARDL). The results indicate that there is a significant (Prob. < 0.05) positive relationship between DMBs' credit and exchange rates. Furthermore, DMBs' lending rate and inflation rate demonstrate a significant negative relationship, while gross fixed capital formation shows an inverse relationship with non-oil exports in Nigeria. The causality test reveals no causality between bank credit to non-oil sectors, exchange rate, and the volume of non-oil exports in Nigeria. However, there is a unidirectional causality between gross fixed capital formation, the lending rate of banks, the inflation rate, and non-oil exports in Nigeria. Based on these findings, it is recommended that both the government and the monetary authorities make concerted efforts to stabilise the macroeconomic variables and promote growth-oriented programs meant to boost the aim of enhancing the production of locally produced goods in the non-oil sectors of Nigeria. Additionally, the Central Bank of Nigeria should consider reducing the bank rate, as this would directly impact other rates within the country.
Kehinde Omolade Daramola (Thu,) studied this question.