The paper explored the implication of banks’ lending on domestic investment in Nigeria for the period 1990 to 2023. Ex-post facto design was used for the study. The study employs secondary data as obtained from the Central Bank of Nigeria (CBN) Bulletin, 2023. Five variables are examined in the study; these are gross fixed capital formation proxied for domestic investment as the dependent variable, whereas bank loans to the real sector, bank loans to government, bank loans to general commerce, and commercial bank loans to total assets were used as explanatory variables. Hypotheses were tested using least squares econometric techniques. The result reveals that commercial bank loans to general commerce, bank loans to the real sector, and bank loans to total assets have a positive and substantial outcome on gross fixed capital formation. According to the r2, changes in the credit variables offered by commercial banks stood at 75% of the variations in domestic investment in the Nigerian economy. The research comes to the conclusion that domestic investment in Nigeria is significantly positively impacted by commercial bank lending. Accordingly, the research suggested that the government provide the favourable conditions necessary for small, medium, and big businesses to function. Monetary and fiscal policies that are business-friendly might accomplish this. Commercial banks should lower their lending interest rates to promote business operations across a range of industries and spur economic growth. In order to encourage banks to finance the real sector economy, the CBN and policymakers should implement dynamic economic policies like interest rate stability, flexible exchange rates, indigenisation, and diversification of economy. To create specialised banks that will be in charge of funding the industry, monetary authorities need to come to an agreement
Ebiye et al. (Fri,) studied this question.