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. 9 NO. 4 2023

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The Relative Effectiveness of Monetary Policy on Investment in Nigeria

Kongo Aaron Ateata Patience Ote Ola & Odike Abraham Ijuo

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Abstract

This study investigated the relative effectiveness of monetary policy on investment in Nigeria for the period 1990Q1 to 2019Q4 using SVAR model. The study found out that monetary policy is effective for influencing investment in Nigeria in short run, medium and long run. Specifically, the study found out that interest rate, bank credit and exchange rate are the most ef fective variables for influencing investment when compared with other variables (money supply, inflation and exchange rate) within the model of the study. The study therefore recommend that central bank should peg monetary policy rate at a threshold suitable to increase money supply and credit facilitation by commercial banks in order to stimulate investment in the Nigeria economy.

keywords:

Relative Effectiveness, Monetary Policy, Investment

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References:

Abdullahi (2022) analysed M2, credit, interest and exchange rates to find long and short run
impact of monetary policy on private sector performance in Nigeria.

Afrin, S. (2017). Monetary Policy Transmission in Bangladesh: Exploring the Lending Channel.

Journal of Asian Economics, 49, 60–80. https://doi.org/10.1016/j.asieco.2016.10.003

Eregha, P. B. (2010). Interest Rate Variation and Investment Determination in Nigeria.
International Business Management, 4(2), 41–46. https://doi.org/10.3923/ibm.2010.41.46

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