Private Sector Lending and the Financial Performance of Listed Manufacturing Companies: Nigerian Experience (2000-2023)

Abstract

This study examines the impact of private sector lending on the financial performance of listed manufacturing companies in the Nigerian Exchange Group. Specifically, the study aims to evaluate the effect of private sector lending on the financial performance of these firms, examine its relationship with capital structure, and assess its role in supporting business expansion and operational efficiency. Anchored on the Pecking Order Theory and Agency Cost Theory, the study highlights how financing preferences and agency conflicts influence financial outcomes in the Nigerian manufacturing sector. The research adopts an ex-post facto design using time series data spanning from 2000 to 2023. Data were sourced from the Central Bank of Nigeria (CBN) statistical bulletin and analyzed using multiple regression techniques in E-views 10.0. Descriptive statistics, unit root tests, cointegration tests, and correlation analysis were performed to validate the robustness of the model. The regression results indicate that private sector credit (coefficient = 2.5981, p = 0.0005) and capital structure (coefficient = 5.0365, p = 0.0003) have significant positive effects on return on assets, while business expansion negatively impacts financial performance (coefficient = -1.0271, p = 0.0001). The adjusted R² value of 0.8988 confirms that the model explains 89.88% of the variation in financial performance. The researcher concluded that access to private sector credit enhances profitability and optimal capital structuring, but inefficient business expansion strategies can erode financial gains. It was recommended that financial institutions should improve access to affordable credit tailored to manufacturing firms' capital needs, manufacturing companies should optimize their capital mix to enhance value creation, and strategic planning should guide business expansion to avoid adverse financial implications.