DOES PUBLIC BORROWINGS CROWD OUT PRIVATE SECTOR CREDIT? EVIDENCE FROM NIGERIA

ABSTRACT: The performance of the private sector in Nigeria has been declining,due to constrained financialresources. Thisstudyemployed Autoregressive Distributed Lag Model (bounds) test to investigate the impact ofgovernment borrowing on the availability of credit to the private sector in Nigeria, using quarterly data from theperiod2000 to 2021.The findings from the study revealed that government borrowings crowds out private sectorcredit in Nigeria.Therefore,the study recommended that, since the private sector is regarded as the engine ofgrowth in any economy, the government should uphold a fiscal policy framework and debt policy that willcontinuously support the growth of the private sector in Nigeria. Government borrowings should be on needbasis, andshould embark on more capital projects, that would create employment opportunities for the growinglabour force. This, in the short and long run would lead to increased economic growth.

Keywords: Government, private sector, borrowings, expenditure, revenue, credit, fiscaldeficit, economy, andgrowth