IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 7 2024
DOI: 10.56201/jafm.v10.no7.2024.pg90.104

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Monetary Policy And Economic Growth: The Nigerian Experience 1980 To 2022

Ogunuku, Sunday Ebierede, Anumudu, Charles N. Ph.D. and Ogbonnaya, Chukwuemeka M.

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Abstract

The study investigated the relationship between monetary policy and economic growth using the Nigerian experience between 1980 to 2022. The ex-post facto research design in addition to time series data was employed in the study. Variables that were used in the study are real gross domestic product per capita (GDPPC), specified to depend on monetary policy variables such as Exchange Rate, Interest rate, inflation rate,money supply, treasury bills and credit to the private sector. The Seemingly Unrelated Regression (SUR) Equations model in conjunction with the Bounds Cointegration approach was used. The results show that at a 5% level of significance, there is no significant relationship between inflation and money supply on economic growth in Nigeria within the period under study. This is because, when the money supply pushed into circulation is hoarded, the expected economic activities such monies are meant to generate to affect economic growth are stalled. On the other hand, the results show that the duo of interest rate and treasury bills had significant effect on economic growth in Nigeria during the period under study. For every unit change in RIR, GDPG grows by 0.16 units. On the contrary, a unit change in TB will result in 0.005 decreases in GFCF. The study recommends that the Central Bank of Nigeria should have a policy framework that will combine different monetary policy instruments with a focus on the reduction of interest rates to single digits. This will motivate potential investors and entrepreneurs who find it difficult to borrow from banks to finance their operations because of the high cost of borrowing.

keywords:

Seemingly Unrelated Regression, Monetary Policy, Economic Growth.

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