Abstract
This study examined the relationship between economic growth, government borrowing, and private sector credit in Nigeria over a 53-year period (1972–2024). The analysis utilized time series data on external borrowing, domestic borrowing, total government borrowing, and private sector credit, all obtained from secondary sources. Pairwise Granger causality tests were employed to assess the direction of influence among the variables. The findings revealed a bidirectional long-run relationship between domestic borrowing and economic growth, indicating mutual influence over time. Similarly, a bidirectional long-run relationship was also observed between private sector credit and economic growth, suggesting that credit to the private sector and economic growth reinforce each other. However, the study found a unidirectional long-run relationship from total government borrowing to economic growth, with no reverse causality. Additionally, the results showed no significant relationship between external borrowing and economic growth in either the short or long run. The relationship between aggregate government expenditure and economic growth revealed a one-way association in the long run. Based on these findings, the study recommends that the government should focus on creating a conducive business environment that enables the private sector to thrive and contribute meaningfully to economic development.