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Money Supply and Economic Development in Nigeria

Prof. G.I Anyanwu, Prof. K.C Otiwu, and P.N. Ozuzu

Abstract

This study assessed the effect of Money Supply on Economic Development in Nigeria for the period 1990 to 2023. Data were collected from the Central Bank of Nigeria Statistical Bulletin 2023 and United Nations Development Programme 2024. The model regress Gross National Income Per Capita as proxy for economic development on money supply measured in Currency in Circulation , Demand Deposit (DD), Quasi Money (QM), Reserve , and Credit to the Private Sector . Augmented Dickey Fuller test revealed mixed order of integration of 1(0) and 1(1), Autoregressive Distributive Lag found that: money supply has long run effect on economic development in Nigeria. The exogenous variables revealed that: CIC is significantly negative on GNIPC in the short run and in the long run; DD has positive effect on GNIPC significant in the short run but insignificant in the long run; QM and CPS revealed non- significant negative effect on GNIPC in the short run and in the long run; and RSV has negative effect on GNIPC significant in the short run but non-significant in the long run.. The researcher concluded that money supply has significant long run effect on gross national income per capita in Nigeria, and recommended that relevant authorities should improve surveillance on the application of currency in circulation to ensure effective deployment to areas of economic importance in other to redirect its effect on the economy; and policies such as increase in deposit rate that will increase demand deposit as a boost to economic development.

Keywords

Money SupplyEconomic DevelopmentEffectNigeria

References

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