This study investigated an argument and counterargument on the relationship between loans and advances by financial institutions and Nigerian economic growth. The paramount objective of this research centers on evaluating the effect of financial institutions credit on Nigerian economic growth. Data were obtained from CBN Statistical Bulletin. Auto Regressive Distributed Lag (ARDL) was used to present the result of the data collected. Findings of deposit money banks performance equation I revealed a strong correlation and significant relationship between independent and dependent variable. It was discovered from Micro-finance banks performance equation 2 that there was a strong correlation and significant relationship between independent and dependent variable. Finance houses performance equation 3 revealed a strong correlation and significant relationship between independent and dependent variable. The study recommends that Deposit Money Banks as Bank financial institution should consistently grant loans to both private sector investors and public sector for productive purpose. Microfinance banks as bank financial institutions in Nigeria should increase their liquidity through improved deposit mobilization, which will increase credit availability of Micro-finance banks to small business investors. The study also recommends that finance houses as nonbank financial institutions mobilise adequate deposit and concurrently make funds available in order to fulfill all their financial obligations.