IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 1 2016

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LIQUIDITY MEASUREMENT IN NIGERIA

Ajiteru, Temilade Olumayokun

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Abstract

The incidence of excess liquidity is a reality in many economies. Excess liquidity raises concern about inflationary pressures and the transmission mechanism of monetary policy and its effectiveness. Although the incidence of excess liquidity affects a large number of countries, the literature that sets out its measurement are limited. This research seeks to measure excess liquidity in the Nigerian economy. The method of mean deviation was used on time series data from 1970 – 2013 to estimate the extent of excess liquidity in Nigeria. The result obtained showed the presence of excess liquidity and its magnitude in the Nigerian economy. It was recommended amongst others, that contractionary Monetary Policy and prudent use of monetary instruments be used to mop up liquidity that is detrimental to economic growth in the domestic economy.

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