IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF FINANCE AND INVESTMENT RESEARCH (WJFIR )

E-ISSN 2550-7125
P-ISSN 2682-5902
VOL. 7 NO. 4 2023
DOI: https://doi.org/10.56201/wjfir.v7.no4.2023.pg121.138

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Monetary Policy and Economic Performance in Nigeria

Andabai Priye Wergbelegha, Obah, Obah Daddy

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Abstract

The study examines the impact of monetary policy on the Nigerian economy; for the period1996-2019. Secondary data were collected from Central Bank of Nigeria Statistical Bulletin, 2020.The study used Gross Domestic Product as proxy for Nigerian economy and used as the dependent variable; while, monetary policy rate, cash reserve requirement and liquidity ratio are used as independent variables to measure monetary policy. Hypotheses were formulated and tested using Ordinary Least Square (OLS). The study reveals a positive significant impact of monetary policy rate, on Gross Domestic Product in Nigeria. Cash reserve ratio has a positive significant impact on Gross Domestic Product. Liquidity ratio has significant impact on Gross Domestic Product in Nigeria. The coefficient of determination indicates that about 62% of the variations in performance of Nigerian economy can be explained by changes in monetary policy variables (TB, CRR and LR) in Nigeria. The study concludes that monetary policy had significantly affected performance of Nigerian economy. The study recommends that policy makers should formulate monetary policies that would stimulate the economy. Financial institution and banks should formulate strategy to sign up profitable portfolios so as to remain in business in case of increase in the cash reserve requirement. Policy makers should ensure consistency of monetary policy in the economy before reviews, so as to measure its impact on the economy. Regulatory authorities will need to build a strong synergy between monetary policy and banking institutions so as to chart a common course for the performance of the economy.

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References:

Ajayi, D & Ogbundie, S. A (2019). Empirical analysis of monetary policy and its implication
on agricultural sector growth in Nigeria. International Journal of Finance and
Economics, 16(6), 124-139.

Adunbge, P. A & Anahugere, D (2018). Impact of monetary policy on agricultural sector
growth in
Nigeria. International Journal of Accounting and research, 18(3), 211-
218.

Adegboye, F. B; Olowe, O. & Uwigbe, O. (2017). Return on investment of deposit money
banks in Nigeria. Journal& Applied Finance &Banking, 3(5), 23-34.

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