MICROCREDITS AND ECONOMIC GROWTH INNIGERIA: THE STEPWISE REGRESSION ANALYSIS APPROACH
Abstract
The present study examined the relationship between microcredit allocation and economic growth using the stepwise regression technique. The stepwise regression is used to rank the effects of sectoral microcredits and identify which variables contribute most significantly to explaining variations in gross domestic product (GDP).The study used time-series data, sourced from Central Bank of Nigeria reports from 1992 to 2022. Five sectors were considered for this study namely microcredits allocations to Agriculture/Forestry, Manufacturing/Food processing, Mining/Quarry, Real Estate/Construction, and Transport/Commerce. Five models 1-5 were developed using predictor variables, the result showed that model 5, a comprehensive model incorporating Microcredit in Agriculture and Forestry Sector (MCAS), Microcredit in Manufacturing and Food Processing Sector (MCMS), Microcredit in Mining and Quarrying Sector(MCMQ),Microcredit in Transport and Commerce Sector(MCTC), and Microcredit in Real Estate and Construction Sector(MCREC), explained a substantial 91.8% of the variations in gross domestic product (GDP). Therefore the study concludes that microcredit allocation to the five sectors had significant effect on economic growth in Nigeria.
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