AN EMPIRICAL ANALYSIS OF THE EFFECTIVENESS OF SELECTIVE CREDIT CONTROLS ON SMALL SCALE MANUFACTURING INDUSTRIES IN ENUGU STATE OF NIGERIA(1980-1994)

Authors

GEORGE DUHU ISIWU

Keywords:

MANUFACTURING INDUSTRIES
SELECTIVE CREDIT CONTROLS
ENUGU STATE
NIGERIA

Synopsis

This study is motivated by the recent emphasis by the Federal Government of Nigeria on the promotion of small-scale Industries as a strategy for self-reliant industrialisation. The Central Bank of Nigeria (CBN) issues guidelines to banks to ensure that at least 20 per cent of their total loans and advances are allocated to these enterprises in the country. Yet, Small-scale manufacturing industries in Enugu State of Nigeria still face a high rate of business failures. Hence, the need for this study. This study is limited to six small-scale manufacturing industries in Enugu State that are registered with Enugu State Ministry of Commerce and Industry (Funds for small­ scale industries Unit) and the National Association of Small-Scale lndustrialists, (NASSI) Enugu. Their choice for this study is guided by the data availability during the period covered. To analyse the data,linear reggression applying Ordinary least squares (OLS)technique was adopted to test the parameter estimates. The empirical results show that there is credit rationing to these enterprises sampled and the impact of rationing on their total gross investment is significant. It is also found that selective credit controls, through which credit rationing cornes into effect, is ineffective in influencing their investment activity.

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Published

July 20, 1997

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