PRIVATE SECTOR CREDIT AND CONSTRUCTION SECTOR GROWTH IN NIGERIA, 1990-2014: A CO-INTEGRATION ANALYSIS

The study examines the relationship between private sector credit and construction sector growth in Nigeria over a period, (1990-2014). The study used time series secondary data obtained from Central Bank of Nigeria Statistical Bulletin and National Bureau of Statistics. The study used Construction Sector Growth as the dependent variable; whereas, Broad Money Supply, Credit to the Private Sector, Interest Rate and Inflation Rate as the explanatory variables. Hypotheses were formulated and tested using time series econometrics techniques. The study reveals that all the variables of the study are stationary at first difference. The study shows the existence of at least one co-integrating relationship at 5% level of significance. The study reveals a short-run equilibrium significant relationship between private sector credit and construction sector growth in Nigeria. There is no causal relationship between private sector credit and construction sector growth in Nigeria. The study concludes that private sector credit has not significantly contributed to construction sector growth in Nigeria . The study recommends that for the economy to grow, the construction sector should be encouraged in form of concessional and reduced interest rate. The study suggests that regulatory authorities should stabilize the interest rate which is capable of ensuring price stability and maintaining inflation to a single digit. This may build confidence in the banking institutions and will enable them to introduce innovations to boost construction sector growth in the economy. CBN and policy makers should adopt vibrant economic policies such as interest rate stability, flexible exchange rate, indigenization and economic diversification which will encourage the banks in financing the construction sector.