Specialised Bank’s Credit Provision in Nigeria: Implication on Poverty Reduction
The menace of poverty in developing countries is overwhelming and different policies and programmes have been strategized towards curbing the menace. Among these, is the introduction of the specialised bank’s credit provision with the main objective of serving the grassroots people who might probably be vulnerable to falling below the poverty threshold. Thereby, this study set to investigate the implication of specialised bank’s credit provision in Nigeria on poverty reduction. Time-series data on the specialised bank were extracted from the Central Bank of Nigeria Statistical Bulletin and regressed on poverty incidence using Autoregressive Distributed Lagged Model (ARDL) as preliminary tests suggest. Per Capita Income and Other (uncategorised loans) reduce poverty by 0.16 and 0.000086 per cent respectively at a 5 per cent significance level. In the short-run, per capita income, manufacturing and food processing, transport and commerce, and microcredit lending to other sectors that are unclassified reduce poverty by approximately 0.30, 0.0008, 0.0002 and 0.0006 per cent respectively and all are statistically significant at 1 per cent except for transport and commerce, which is significant at 10 per cent. Any deviation in the models would be corrected approximately in 1 year 6 month and 3 years and 3 months both Model 1 and 6 respectively. The credit provisions by the specialized banks in Nigeria is not very effective in poverty reduction. Microcredit lending might not be reaching intended borrowers as many of the lending components do not reduce poverty. Check and balance is necessary, especially, in an instance of commercial credit guarantee by the government or donor.