Impact of Monetary Policy on Economic Growth in Nigeria (1990-2017)

Abstract

The study examined the impact of monetary policy on economic growth in Nigeria; for the period 1990-2017. Secondary data were collected from the Central Bank of Nigeria Statistical Bulletin. The study used Gross Domestic Product as proxy for economic growth and employed as the dependent variable; whereas, monetary policy rate, liquidity rate and Treasury Bills respectively were used as the explanatory variables to measure monetary policy. Hypotheses formulated were tested using Ordinary Least Square (OLS) techniques. The study revealed a significant impact of Treasury Bills on Gross Domestic Product in Nigeria. Liquidity ratio had a significant impact on Gross Domestic Product in Nigeria. Monetary policy rate had a significant impact on Gross Domestic Product in Nigeria. The coefficient of determination indicated that about 62% of the variations in private sector of the economy can be explained by changes in monetary policy variables. The study concluded that monetary policy had impacted significantly on private sector growth in Nigeria. The study recommended that policy makers should strong economic policies that will maintain and stabilize the economy. CBN should lay down strict prudential guidelines to stabilize and strengthen the economy. The CBN should review the Monetary Policy Rate downwards so as to reduce the cost of credit and increase the flow of investible funds to the economy.

Keywords: Economic, Growth, Nigeria, Policy, monetary


Article Review Status: Published

Pages: 14-21 (Download PDF)

Creative Commons Licence
This work by European American Journals is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License