RESEARCH
METHODOLOGY
In order to properly locate and
situate the impact of commercial bank credit and industrial growth in Nigeria,
an econometric methodology of research will be used in estimating the model.
This is because of its interesting BLUE (Best linear unbiased Estimator),
minimum variance, zero mean value of the random terms, and its intrinsic
assumptions (Koutsoyiannis 2001, Gujarati 2004, Baltagi, 1999, and Nwobi 2001).
MODEL SPECIFICATION
The essence of economic modelling is
to represent the phenomenon under investigation in such a way as to enable the
researcher to attribute numerical values to the concept. To determine the
effect of commercial bank credit on industrial sector growth, we will specify
the model as:
MAN =
f (CRDT,IR) ……………….. 3.1
Where
MAN
= Manufacturing
sector output (Dependent variable)
CRDT = Commercial
banks total credit to private sector
(Independent variable)
IR
= Real interest Rate (Independent variable)
In a linear function, it is represented as
follows,
MAN = β0 + β1
CRDT +
β2IR + ut --------------------- 3.2
Where
β0 = Constant
or intercept
β1 = Commercial
bank credit parameters
β2 = Real
interest rate parameters
ut = Error
term or Stochastic variable
MODEL EVALUATION
At this level of research, using a
time series data, the researcher estimates the model with ordinary least square
method. This method is preferred to others as it is best linear unbiased
estimator, minimum variance, zero mean value of the random terms, etc
(Koutsoyiannis 2001, Gujarati 2004, Baltagi, 1999, and Nwobi 2001).
However, due to conventional
reasons, the researcher will make use of E-view software statistical package in
running the regression. This as believed by the researcher will help in
determining the result of the various tests that is to be carried out. These
test as defined by statistical theory and will be used to evaluate the reliability
of the parameter estimates. According to (Gujarati, 2004), “a test of
significance of a procedure by which sample results are used to verify the
truth or falsity of a null hypothesis…”
The
tests that will be considered in this study include:
v
Coefficient of multiple determination (R2)
v
Standard Error test (S.E)
v
T-test
v
F-test
v
Durbin Watson Statistics
Coefficient
of Multiple Determination (R2
): It is used to measure the proportion of variations in the
dependent variable which is explained by the explanatory variables. The higher
the (R2) the greater the proportion of the variation in the
independent variables.
Standard
Error test (S.E):
It is used to test for the reliability of the coefficient estimates.
Decision Rule
If
S.E < ½ b1, reject the null hypothesis and conclude that the
coefficient estimate of parameter is statistically significant. Otherwise
accept the null hypothesis.
T-test:
It is used to test for the statistical significance of individual estimated
parameter. In this research, T-test is chosen because the population variance
is unknown and the sample size is less than 30.
Decision Rule
If
T-cal > T-tab, reject the null hypothesis and conclude that the regression
coefficient is statistically significant. Otherwise accept the null hypothesis.
F-test:
It is used to test for the joint influence of the explanatory variables on the
dependent variable.
Decision Rule
If
F-cal > F-tab, reject the null hypothesis and conclude that the regression
plane is statistically significant. Otherwise accept the null hypothesis.
Durbin
Watson (DW): It is used to test for the presence of
autocorrelation (serial correlation).
Decision Rule
If
the computed Durbin Watson statistics is less than the tabulated value of the
lower limit, there is evidence of positive first order serial correlation. If
it is greater than the upper limit there is no evidence of positive first order
serial correlation. However, if it lies between the lower and upper limit,
there is inconclusive evidence regarding the presence or absence of positive
first order serial correlation.
SOURCES OF DATA
The data for this research project
is obtained from the following sources:
- Central
Bank of Nigeria Statistical Bulletin for various years.
- Central
Bank of Nigeria Annual Account for various years.
- Central
Bank of Nigeria Economic and Financial Review for various years.