Market Capitalization, Bank Lending and Manufacturing Firms' Output : An Empirical Evidence from Nigeria
This study examines manufacturing firms' output in relation to market capitalization and bank credit in Nigeria using co-integration and vector error correction from 1986 to 2016. The result reveals long run equilibrium relationships between market capitalization, bank credit, and manufacturing firm output. It was discovered that BAC (-1) has an inverse relationship with manufacturing firm output, however, MAO(-1), MCA(-1), RGDP(-1), REXR(- 1) and RINR(-1) had a direct relationship with manufacturing firms' output. It was also discovered that MAO (-1) and BAC(-1) have an inverse relationship with market capitalization. The stability test conducted established that the model can be used for policy formation and implementation in Nigeria. Therefore, the study concludes by highlighting the need for better access to stock market to enhance the quality of market capitalization. Also, bank credits must be correctly channelled towards enhancing the growth of manufacturing firms' output.