IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
Vol. 1 No.8 2015

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The Nexus between Money Market Operations and Economic Growth in Nigeria: An Empirical Investigation

Iwedi Marshal and Igbanibo Dumini Solomon

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Abstract

This study empirically examine the nexus of money market operations on economic growth in Nigeria. The study made use of secondary data which were obtained from the Central bank of Nigeria Statistical Bulletin (2013). The data were collected for a period of thirty three years (1980-2013). The descriptive statistical tools and sophisticated econometric tools of the vector auto-regressions (VAR), Johansen Co-integration, and Granger causality tests was employed in the analysis of the data. It was found among other things that there is a positive significant short-run and long-run relationship between money market operations and economic growth in Nigeria. The result shows that causality flows from economic growth proxy by GDP to money market operations but not vice versa. Based on the empirical analysis, it is concluded that money market operations delivers short term growth tendencies and can help to ensure long run impressive and steady growth rates in Nigeria as it is a key component of the financial system, a fulcrum of monetary operations conducted by the central bank in its pursuit of monetary policy objectives. It is recommended that, the government should both in short and long-run prioritized policies geared towards increasing/developing money markets operations in Nigeria in order to make the economy more stable.

keywords:

Money Market, Money Market Instruments, Economic Growth

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Maduka, A.C., and Onwuka, K.O. (2013). Financial Market Structure and Economic Growth:
Evidence from Nigeria Data. Asian Economic and Financial Review. 3(1): 75-98.

Pagano, M. (1993). Financial Markets and Growth: An Overview. European Economic
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Seck, D., and Nil, Y.M. (1993). Financial Liberalization in Africa. World Development
Journal 21(11):1867–81.

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