Federal University Wukari, Taraba State, Nigeria

Analyzing Impacts of Entrepreneurship Development on Economic Growth in Nigeria using Vector Error Correction Model (VECM)

Akinromade Olabimpe Wakilat, Oladipo Abimbola Oluwaseun, Lawal Elisha Omotunde

Keywords: Entrepreneurship, Economic growth, Development, Entrepreneur, Interest Rate


This paper examines impacts of entrepreneurship development on economic growth in Nigeria for the period 1981 to 2017. In this period, several job creation policies of the Nigerian government focused at attaining free enterprise economy in the country. Data for the paper emerged through a systematic review of annual time series data from the Central Bank of Nigeria (CBN) involving credit to SMEs (CRSM), percentage of commercial banks’ shares to SMEs (PTCR), credit to private sector (CRPS), unemployment rate (UEPR), inflation rate (INFR), and interest rate (INTR) as explanatory variables; and Gross Domestic Product (GDP), the proxy for economic growth, as the dependent variable. The vector error correction technique was utilized to check the speed of adjustment from the short run disequilibrium to long run equilibrium position. From the results of the regression, variables such as CRSM, CRPS, PTCR were found to have significant positive impacts on the economic growth of Nigeria; while INTR, INFL and UEPR had insignificant negative impact on the GDP. The F-statistic shows that the variables are jointly statistically significant to economic growth in Nigeria. The study concludes that entrepreneurship development has significant impact on economic growth in Nigeria. The paper recommends that commercial banks should encourage financial inclusion in manners that Nigerian entrepreneurs are given easy access to loans. Consequently, there should be a reduction in interest rates as high interest rates deter aspiring entrepreneurs. Commercial banks in Nigeria should review collateral conditions to encourage entrepreneurs to easily access loans.

Author Biography

Akinromade, Olabimpe Wakilat

Department of Economics,

Nigeria Defence Academy, Kaduna, Nigeria

Oladipo, Abimbola Oluwaseun

Department of Economics,

Nnamdi Azikwe University, Awka, Nigeria

Lawal, Elisha Omotunde

Department of Vocational and Technical Studies,

Federal College of Forestry, Kaduna, Nigeria

Corresponding author:

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