COMMERCIAL BANKS' LENDING AND DOMESTIC INVESTMENT IN NIGERIA

ABSTRACT The study investigated the impact of commercial bank lending on domestic investment in Nigeria; for the period 1996-2023. Secondary data were used and collected from central Bank of Nigeria Statistical Bulletin, 2023. The study used domestic investment a proxy for domestic investment and used as the dependent variable; whereas, the explanatory variables include commercial bank credit to service sector, commercial bank credit to agricultural sector and commercial bank credit to private sector in Nigeria. The study reveals that total commercial bank credit service sector has a positive significant impact on domestic investment in Nigeria. Commercial bank credit to private sector has a positive significant impact on domestic investment in Nigeria. Commercial bank credit to agriculture has a positive significant impact on domestic investment in Nigeria. The coefficient of determination indicates that about 65% of variation in domestic investment in Nigeria can be explained by changes in commercial bank lending variables in Nigeria. The study concludes that commercial bank leading has positive significant impact on the growth and development of domestic investment in Nigeria. The study recommends the that policy makers and regulatory authorities should create conducive business environment to enable the financial institutions to thrive effectively. Government 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 the output in the economy, CBN and policy makers should use vibrant economic policies such as interest rate stability, flexible exchange rate, indigenization and economic diversification which will encourage the banks in financing the economy.