IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF ENTREPRENEURIAL DEVELOPMENT STUDIES (WJEDS )

E-ISSN 2579-0544
P-ISSN 2695-2483
VOL. 9 NO. 2 2024
DOI: https://doi.org/10.56201/wjeds.v9.no2.2024.pg53.66

---

Monetary Policy Variables and Performance Manufacturing Sector in Nigeria

K.C. Otiwu , Duruechi A.H

---

Abstract

Monetary Policy in Nigeria have not been effective over the years due to fiscal dominance through heavy and persistent government budget deficits, poor data quality that make econometric analysis difficult, inefficient payments system and poor banking habits where the CBN finds it difficult to control huge funds outside the banking system. The crux to this study is to examine the effect of monetary policy variables on the performance of manufacturing sector in Nigeria. The manufacturing sector performance served as dependent variable, while open market operations, the monetary policy rate, the liquidity ratio, and the cash reserve requirement served as proxies for the monetary policy. The study's geographic focus is Nigeria, and its temporal scope spans 1987 to 2022, taking into account the post-structural adjustment program and additional measures including economic deregulation throughout this time. The Central Bank of Nigeria (CBN), the National Bureau of Statistics (NBS), and the World Bank Index (WBI) annual statistical report served as the sources of data for this quasi-experimental study. The acquired data were statistically analyzed using the error correction model, the Johansen co-integration test, the unit root test, and other methods to achieve the goals like error correction model. The findings showed that the increase in open market operation, cash reserve ratio and liquidity ratio led to increase in manufacturing sector performance (MSP) in Nigeria. While increase in monetary policy rate led to decrease in manufacturing sector performance (MSP) in Nigeria. This shows that the variables OMO, MPR, CRR and LR and MSP share mutual stochastic trend and are linked in a common long-run equilibrium relationship. In conclusion, there is a long-run equilibrium relationship between monetary policy indicators and manufacturing sector performanc

keywords:

Monetary Policy Variables, Performance, Manufacturing Sector, Nigeria

---

References:

Adesina, A. A (2021). Overcoming binding constraints to competitive manufacturing for
Intraregional
trade.
Retrieved
from
https://www.afdb.org/en/news-and-
events/speeches.
CBN (1992) Monetary Policy Department: http://www.cenbank.org.1 Central Bank of Nigeria
Statistical Bulletin for several issues: http://www.cenbank.org/
CBN (2008). Central Bank of Nigeria (CBN), Monetary Policy Department Series 1, 2008.
CBN/MPD/Series/ 01/2008. www.cbn.org.ng

Diamond, D.W. (2003). Financial intermediation: Delegated monitoring and long-term
relationships. Journal of Banking & Finance 13(1):9-20.

DOWNLOAD PDF

---

Back