English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Global: Zendy Plus annual

Presents the access of premium content as premium feature

Premium Content

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the summarisation as premium feature

Summarisation

Insights

Presents the pdf analysis as premium feature

PDF Analysis

Presents the zaia usage as premium feature

ZAIA

Global: Zendy Tools annual

Global: Zendy Free Plan

Global: Zendy Tools monthly

Global: Zendy Plus monthly

This study seeks to determine the linkage between capital formation and capacity utilization rate of the manufacturing sector in Nigeria using annual data from 1981 to 2009. In our empirical analysis, we run an ordinary least square test to verify the statistical significance of the variables used and augmented form of granger causality test to identify the direction of the relationship between this variables in the long run. Empirical investigations revealed that only one variable is statistically significant at 5% and this variable is gross fixed capital formation. However, this variable is negatively related to average capacity utilization rate, in which case is not in conformity with a prior expectation which is justified by is co-efficient value of -0.14, which implies that a unit increase in capital formation to the manufacturing sector, will decrease average capacity utilization by 14%. Our findings based on granger causality test suggest the existence of uni-direction causal relationship between average capacity utilization rate and capital formation with the direction from capital formation. There is an existence of a bi-direction relationship between average capacity utilization and gross domestic product. Based on our findings, the study therefore recommends that Nigeria government should encourage capital formation via commercial banks to reduce the interest rate on loans and advances that will encourage more investment in manufacturing sector with absolute monitoring by the commercial banks to save the loans from being diverted from its main purpose.

The Linkage Between Capital Formation And Capacity Utilization Of Manufacturing Sector In Nigeria