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. 10 NO. 9 2024
DOI: 10.56201/ijebm.v10.no9.2024.pg64.78

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Assessment of the Effect of Monetary Policy on Economic Development in Nigeria

Bright Onoriode OHWOFASA, Sunday AGUWAMBA PhD, R. ADEGHE PhD

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Abstract

The study assessed the influence of monetary policy instruments on economic development in Nigeria covering the period, 1986-2023. The monetary instruments were decomposed into Treasury bill rate, monetary policy rate, cash reserve ratio, liquidity ratio and money supply. The contemporaneous relationship between the variables were assessed using the restricted error correction model. Accordingly, the study found a long run equilibrium relationship between the dependent and the explanatory variables. Specifically, it was observed that Treasury bill rate, cash reserve ratio and monetary policy rate had significant positive impact on economic development in Nigeria. On the other hand, the study found that economic development is significant and negatively responsive to changes in money supply. On the bases of the findings therefore, the study recommended efficient manipulation of the aggregate money supply in order to achieve the desired policy targets. Finally, the study suggested that MPR should be used to adjust interest rate policy through minimum rediscount rate thereby preventing interest rate from being an obstacle to growth of both private and public investment in Nigeria.

keywords:

Monetary policy Instrument, Monetary Authority, Economic Development, Nigeria.

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