Summary
This study examines the effect of commercial bank's credits to defined sectors of the Nigerian economy on their performance using commercial bank total investments and foreign assets as performance indicators for a period of twenty-six years(1981-2006). The OLS estimation technique adopted for the study revealed that sectoral credits has a direct and significant relationship with both total commercial bank investment and foreign asset base. However, only the commercial bank credit to the Other Sectors as defined contributes significantly to the level of commercial bank investments. Similarly, both commercial bank credit to the Other Sectors and General Commerce exert significant effect on commercial bank's foreign asset base.
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Extract
The Impact of Sectoral Credits On the Performance of Commercial Banks in Nigeria
1. Introduction
Among the many functions of commercial banks is credit extension to the various sectors of the economy. They also have several other functions such as acceptance and safe keeping of deposits and other valuables, transferring of funds, money creation, encouragement of banking habit among citizenry, provision of employment opportunities, execution of government monetary policies and acting as engines of economic development in the economy (Bernanke and Blinder, 1 988 ;Becketti and Morris, 1992; Agen, 1995). In order to enhance the development of Nigerian economy, commercial banks extend credits to various sectors in the economy often as stipulated by the Central Bank of Nigeria(CBN). According to Adeniyi (1985), these credits encourage both the internal and international businesses. Commercial banks' credits are mainly short-term though they also cautiously lend on medium and long-term basis provided it would not hamper their liquidity positions (Nakamura, 1989; Aja, 1995;Ajie,1995).Comm...See the full content of this document
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