Project Abstract

<p> This research study, by means of a robust statistical analysis investigates the<br>impact of deposit money bank on the manufacturing sector in Nigeria. Data<br>from 1980-2011 were examined. The empirical analysis carried out showed that<br>the lag of exchange and commercial bank credit have a significant and positive<br>impact on manufacturing sector in Nigeria within the period under review, and<br>as such the monetary and capital market in Nigeria should be further developed<br>to meet standards and provide the necessary capital for the manufacturing<br>sector. Also the government and relevant authorities should see to the<br>strengthening of the exchange rate. <br></p>

Project Overview

<p> </p><p>BACKGROUND OF THE STUDY<br>Manufacturing is the capacity to produce goods with labour, materials and<br>inputs produced by others. Simple forms of manufacturing have characterized<br>all organised societies but the application of steam power to production in<br>Britain in the late eighteenth and early nineteenth centuries significantly<br>increased the capacity for production, and since this first industrial revolution,<br>economic progress has in many peoples minds been linked with the capacity<br>to produce and trade in manufactured products.<br>Manufactures now dominate world trade and typically are around 80 percent<br>of world exports in any year with developing accounting for nearly one- third<br>of this. In the bulk of developing countries, outside the LDCs and the oil rich<br>states, manufacturers account for a majority of export revenue. In terms of<br>regional distribution, the bulk of developing country manufactured exports<br>come from East Asia (70 percent in 2005) with approximately 40 percent of<br>those from china.<br>Export data are also available by product category gives developing country<br>and regional shares is manufactured exports by selected types of product. It<br>shows developing countries as a group taking more than 50 percent of world<br>exports in the labour intensive, simple technology categories of textiles,<br>footwear and leather<br>The banking sector in Nigeria in 2006 financial year was oligopolistic in<br>structure as only ten banks 11.1% of the 90 operation accounted for 54.5% of<br>total assets, 52.4% of total deposit liabilities and 46.1% of total deposit<br>liabilities of deposit money bank as at 31/12/2006 amounted to #2,705 billion.<br>Whilst aggregate credit to the domestic economy amounted to #1,302.2<br>billion. In 2006, sectoral allocation of deposit money banks credit continued to<br>favour the less productive sector of the economy as only 40.9% of the total<br>credit went to agriculture, solid minerals, exports and manufacturing down<br>from 46.2% in 2001.<br>In the year 2007, the general performance of banks was not significantly<br>different from what happened in the previous year. Ten banks out of the 89 in<br>operations accounted for 55.3% of total credit. At 3,047.9 billion, the<br>aggregate assets, the level as at Dec 31 2006.<br>The manufacturing sector or service enterprise with capital investment<br>exceeding #950,000 in machinery and equipment. The importance of<br>manufacturing sector in the promotion of economic development has always<br>been at the front developing strategies. More so, Nigeria like other<br>developing nations adopted the use of import substitution policy as a means<br>of manufacturing. This aims of producing domestic consumer goods in those<br>industries.<br>Major functions of Nigeria deposit money banks<br>1. Acceptance and safe keeping of deposits<br>2. Granting credit facilities to consumers<br>3. Transferring funds on the instructions to customers<br>4. Management of customers investments<br>5. Acting as executors and trustees of “wills”<br>6. Providing facilities for safe-keeping of important documents and other<br>valuables.<br>7. Providing foreign exchange facilities to travellers<br>8. Advising customers on insurance matters<br>9. Project finance<br>10.Providing financial advisory services to customers<br>11.Packaging real estate transactions.<br>Statement of problem<br>The nation had enunciated import substitution and processing of raw<br>materials policies in the past. These had made the sector to be<br>dependent on the industrialised nation of the world for capital<br>equipment and contributed in no small way to our present economic<br>predicament. The sector is currently heavily dependent on importation<br>of raw material and spare parts. This has put pressure on the countries<br>foreign exchange earnings.<br>Manufacturing sector like any other business cannot be carried on<br>extensively unless funds are available for maintenance and<br>procurement of equipment and necessary inputs. on the other hand<br>deposit money banks accused the manufacturer of loan given to them.<br>Thereby not bringing high degree of loss in their banking activities.<br>Unfaithful and dishonest to them are being critized sequels to this<br>manufacturer. moreover the small scale business can hardly be over<br>stressed, most manufacturer in Nigeria economy have been denied of<br>attention report assessment or could it be that the deposit money bank<br>are not playing their role in promoting manufacturing?<br>Adequate funding is a requirement for running a successful<br>business and it is certainly one of the major reasons for the poor<br>performance of most companies in the Nigeria manufacturing sector.<br>This is because banks are wary of investing their distressed sector that is<br>hemmed in by a hostile business environment is not encouraging. Sad<br>enough, the evolving scenario these days, at least before the crash in<br>the capital market, is that the capitalists and banks prefer to advance<br>facilities to clients to enable them invest in securities market. Such<br>clients would in turn go to bad” and watch their investments multiply<br>over night without doing anything rather than too invest such money in<br>any SME (small and medium scale enterprise) or so called “risky”<br>business. This thinking of the capitalists and the banks further weakened<br>the real sector thereby denying the manufacturing sector the<br>opportunity to generate employment.<br>OBJECTIVE OF THE STUDY<br>1. To find out if inadequate credits from the deposit money banks to the<br>manufacturing sector has contributed to the reduction in the<br>productivity of the manufacturing sector.<br>2. To determine how the unwillingness of the deposit money bank to give<br>loans to the manufacturing sector has affected.<br>3. Also to look into the problems that militates against the manufacturing<br>sector apart from finance in Nigeria and the recommendation where<br>necessary.<br>HYPOTHESIS OF THE STUDY<br>The following hypothesis are tested on this study<br>Ho: The manufacturing sector contribution has no significant impact to<br>lending in the deposit money bank.<br>Ho: Deposit money bank interest rate has no significance effect on<br>manufacturing development in Nigeria.<br>SIGNIFICANCE OF THE STUDY<br>The result of the study will provide an insight into the relationship between<br>deposit money bank credit and the manufacturing sector. It will provide the<br>basis for which policies should be made by the government through the<br>monetary authority (the central bank of Nigeria) towards the prioritizing of<br>credits granted to the manufacturing sector.<br>Again, it will expose the important role the deposit money banks play<br>towards the productivity of the manufacturing sector and to therefore<br>make sure that there is a good working relationship between sectors.<br>The study makes clear the actual contribution and operations of deposit<br>money banks in Nigeria. It will also sensitize the society on the importance<br>of deposit banks in Nigeria.<br>The study will be important to the policy makers and the government in<br>order that to adopt and implement policy measures that will boost the<br>economy through the financial institution.<br>It will also depict the negative and positive side of the activities of the<br>negative and positive side of the activities of the general public and<br>bankers, for some correction and changes in order to boost the economy.<br>Also, it is believe that the findings of this research will lead to further on<br>how deposit money banks and the other manufacturing sector, which will<br>eventually lead to the development of the economy.<br>The usefulness of this study is that it will highlight to the nation as a<br>whole on how best to manipulate deposit money bank loans for financing in<br>order to improve the state of industrial product in the country.<br>It will also give the government an overview of constraint of industrial<br>financing and how best to manage deposit money bank loan in order to<br>yield output.<br>It will show deposit money banks how to increase industrial financing<br>for growth in the economy.<br>RESEARCH QUESTIONS<br>These are self guide question used to guide the research in the course of<br>providing solution to the problem<br>The following are questions that arise when drawing references from<br>the study.<br>a. How does deposit money bank significant to influence on the<br>manufacturing output.<br>b. Does manufacturing development depend on the deposit money bank<br>loan.<br>c. Do deposit money banks give loan for manufacturing finance?<br>d. If so, to what extent has the manufacturing sector growth since the<br>assistance started.<br>e. Is there any relationship between deposit money banks financing and<br>the Nigeria industrial growth?<br>LIMITATION OF THE STUDY<br>The main task of the study is to given in full determine the impact of<br>deposit money banks in fund mobilization for industrial growth and<br>development but due to insufficient time for industrial growth and<br>development but due to insufficient time frame for the purpose of simple<br>and articulate analysis, the study is restricted to deposit money banks<br>specifically. The study is limited to the period of 2005-2010 which saw the<br>significant impact played by the financial sector in the Nigerian economy.<br>BSTRACT<br>This research study, by means of a robust statistical analysis investigates the<br>impact of deposit money bank on the manufacturing sector in Nigeria. Data<br>from 1980-2011 were examined. The empirical analysis carried out showed that<br>the lag of exchange and commercial bank credit have a significant and positive<br>impact on manufacturing sector in Nigeria within the period under review, and<br>as such the monetary and capital market in Nigeria should be further developed<br>to meet standards and provide the necessary capital for the manufacturing<br>sector. Also the government and relevant authorities should see to the<br>strengthening of the exchange rate.</p><p><br></p> <br><p></p>