CHAPTER ONEINTRODUCTION1.1 BACKGROUND OF THE STUDY

The financial sector, especially the Commercial Bank is very important in the smooth functioning of the manufacturing sub-sector of the economic.Lending which may be on short or medium basis is one of the services that Commercial banks do grant loans and advances to individuals, business organizations as well as manufacturing sub-sector in order to enable them carry on investment and development activity as a means of aiding their growth in particular or contributing towards the economic growth of the country in general/ Felicia, 2011.Commercial banks plays crucial role in mobilization and financial intermediation to deficit economic unit.Consequently, these roles make them an important phenomenon in economic growth and development.In performing these roles, it must be realized that banks have the potential, scope and prospects for mobilizing financial resources and allocating them to manufacturing sector and in return increase productivity therefore, irrespective of the sources of the generation of income on the economic policy of the country commercial banks would be interested in giving out loans and advances to their customers bearing in mind the three principle guiding their operations which are profitability, liquidity and solvency (Adolphus 2011).However, the commercial banks decision to lead out money are influence by a lot of factors such as the prevailing interest rate, the volume of deposits, the level of their domestic and foreign investment, banks liquidity ratio prestige and public recognition to menton but a few. Regardless of the fact that the manufacturing sub-sector is the life wire of economy of a country development.This study discovered that these is a high bank lending rate to the manufacturing sub-sector of the economy of which these is not positive relationship between high cost of funds and capacity utilization.It is also discovered that the firms due to high bank lending and cost of maintenance has attributed to low productivity.Okporobie (1989) observes that Nigeria manufacturing sub-sector continue to decline despite the priority given to the sector. Available data shows that performance of commercial banks against this directive has been disappointing. He also observed that without the development of manufacturing sub-sector, the nations quest for industrialization will certainly remain at stake.

1.2 STATEMENT OF THE PROBLEM

The problem of bank lending to manufacturing sub-sector may not necessary be as a result of insufficient funds at the disposal of commercial bank. It has been discovered that the sector still suffers some problems and major constraints among which are:Insufficient funds channel to the manufacturing industries in their for bank lending. Information gaps as to the range of commercial banks and scope of services available in the financial sector. High bank lending /inflated interest rate on the manufacturing sub-sector.The volume of deposit. Banks liquidity ratio

1.3 OBJECTIVES OF THE STUDY

1. To examine the effect of commercial bank lending on the growth of manufacturing sub-sector in Nigeria2. To evaluate the impact of loans disbursed by the commercial banks to the manufacturing sector3. To examine the extent to which commercial bank loans has gone in boasting the manufacturing productivity in Nigeria4. To access the extent to which manufacturing sector performance enhances employment and economic productivity5. To understand the role of commercial bank lending on the growth of manufacturing sub-sector in Nigeria

1.4 RESEARCH QUESTION

These are specific question/investigation which is asked in order for the researched to know the problem encountered by the money deposit banks and the Nigeria manufacturing sub-sector, This proffer solution to the problems.1. Do the commercial bank lending have any significant effect on the growth of manufacturing sub-sector in Nigeria.2. Has the loan disbursed by the commercial bank made any impact to the manufacturing sector.3. Has the manufacturing productivity been boasted by the loans from the commercial banks.4. Do the money deposit banks play any role on the growth of manufacturing sector in Nigeria5. Do the loans/advance granted manufacturing sector impact on employment6. Has the loans received by manufacturing industry enhance productivity and growth.

1.5 RESEARCH HYPOTHESIS

Ho: Commercial bank lending has a significant sectorHi: Commercial bank lending has no significant effect on the performance of the manufacturing sector. T here is no significant relationship between commercial banks loans and advance and capacity utilized of the manufacturing sector.

1.6 SIGNIFICANT OF THE STUDY

The study will high light the relevance or the role of commercial bank lending on the performance of manufacturing sector in Nigeria.It will give information on the possible areas for improvement.Furthermore, the study will help commercial bank to access and appraise their role in their lending to the manufacturing sector in Nigeria.The significance of this study could be seen from the effective mobilization of loans/advances to the manufacturing sector by commercial bank.It would be necessary for the banking sector by commercial bank.It would be necessary for the banking sector vis – a vis the commercial bank to be adequately capitalized so as to play its role well in financial intermediation. It will equally serve as a guideline to future work in the near future. This research will contribute to knowledge and act as the hero for further research.

1.7 THE SCOPE AND LIMITATION OF THE STUDY

This study looks into the effect of commercial bank lending on the growth of the manufacturing sector in Nigeria over the years from 2005 – 2010. This was when the policy of consolidation was introduced by Charles Soludo the enhance or increase the lending rate of commercial banks to the manufacturing sectors.The limitation of this research is generally anticipated to include these of data collection and inaccessibility to relevant data for analysis and execution of the problems.There are also the problems of time constraint, communication mans and finance which may set limits to analysis of the data to be collected.However, in the process of carrying out the study, measures and available opportunities will be explored to enhance the success of this research work.Also change in technology may affect the accuracy of the results generated.