Monetary Policy and Private Sector Growth in Nigeria

Ere Boboyilayefa David; Prof. Andabai; Priye Werigbelegha

doi:10.56201/wjfir.v10.no8.2026.pg1.11

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Monetary Policy and Private Sector Growth in Nigeria

Ere Boboyilayefa David and Prof. Andabai, Priye Werigbelegha

Abstract

This study investigates the impact of monetary policy on private sector growth in Nigeria, utilizing data from 1998 to 2025, sourced from the Central Bank of Nigeria Statistical Bulletin. The study aims to assess the effects of money supply, monetary policy rate , and reserve ratio on private sector output in the country. Using descriptive statistics and the Ordinary Least Squares model for analysis, the findings reveal that an increase in money supply positively and significantly influences private sector output, highlighting the critical role of liquidity in promoting economic growth. Conversely, the study finds that both the MPR and the reserve ratio have significant negative effects on private sector performance, with higher MPR leading to reduced credit access and increased borrowing costs, while higher reserve ratios limit banks' lending capacity. These results suggest that monetary policy, through its control of money supply, interest rates, and reserve requirements, plays a pivotal role in shaping private sector growth. The study emphasizes the importance of ensuring adequate liquidity in the economy while maintaining a balance between credit access and macroeconomic stability. Based on the findings, the study recommends a more accommodative monetary policy approach that focuses on boosting liquidity, lowering the MPR to promote affordable credit, and adjusting reserve ratios to foster credit flow to the private sector. These measures are essential for stimulating private sector investment and enhancing economic growth in Nigeria.

Keywords

Monetary PolicyPrivate SectorGrowthNigeria

References

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Monetary Policy and Private Sector Growth in Nigeria

Abstract

Keywords

References

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