THE EFFECT OF RISING CONSUMER CREDIT ON THE ECONOMIC GROWTH OF NIGERIA

Abstract

This study employed the Non-Linear Auto Regressive Distributed Lag model
(NARDL) and Threshold estimators to investigate the independent effect of
consumer credit on economic growth, this to ascertain whether consumer credit
has a significant effect on economic growth focusing on Nigeria. The annual
World Bank and Central Bank of Nigeria data between 1981- 2021 were used
for the analysis. The findings revealed a long-run co-integration between
consumer credit and economic growth. There is also an evident of a short-run
asymmetric relationship between Nigeria's economic growth and consumer
credit. A threshold of 10.91% was disclosed between consumer credit and
economic growth. Finally, economic growth increases in the early phases of
rising consumer credit but depreciates at later stages when consumer credit
grows above the threshold. Hence, policies promoting and supporting a balance
between benefits and associated risks of consumer credit are paramount.