Efficacy of Monetary Policy Instruments on Economic Growth: Evidence from Nigeria

Tule, Moses K.; Ogundele, Oloruntoba S.; Apinran, Martins Olugbenga

doi:10.18488/journal.aefr.2018.810.1239.1256

Cited by 8 publications

(10 citation statements)

References 27 publications

(28 reference statements)

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“…Interest rate has a positive and significant (10%) impact on economic growth during the study period. This finding is consistent with the findings of Adegbite and Alabi (2013), Ogbonna andUma (2017), andTule, Ogundele, andApinran (2018). A percent increase in the current rate of interest will increase economic growth in Nigeria by 0.42%.…”

Section: Model Interpretationsupporting

confidence: 91%

Monetary Policy Instruments and Economic Growth in Nigeria: An Empirical Evaluation

Shaibu¹,

Enofe²

2021

IJARBSS

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The aim of this study was to investigate the relationship between monetary policy instruments and economic growth in Nigeria using annual time series data from 1986 to 2018. Within this broad objective, the specific objectives were to ascertain the relationship between: (1) crude oil price and economic growth; (2) exchange rate and economic growth; (3) inflation rate and economic growth in Nigeria; (4) interest rate and economic growth in Nigeria; and (5) broad money supply and economic growth in Nigeria. Economic growth was proxied by real gross domestic product growth rate. The data were sourced from the publications of the Central Bank of Nigeria (CBN), Statista.com, and the World Bank. The estimation technique was the ordinary least squares (OLS)-based auto-regressive distributed-lag (ARDL) method with the aid of EViews software. The estimated model was evaluated using some diagnostic tests (serial correlation test, normality test, and stability test). The empirical results showed that only interest rate had a positive (0.42) and significant (10%) impact on economic growth in Nigeria in the short run. In the long run, previous gross domestic product and broad money supply had significant impacts on economic growth in Nigeria. The previous gross domestic product had a negative (-0.72) and significant (10%) impact while broad money supply had a negative (-0.000005) and significant (5%) impact on economic growth in Nigeria. In order to effectively use monetary policy instruments in achieving sustainable economic growth, it was recommended that the monetary authority should develop and implement an expansionary monetary policy capable of creating rapid growth of money supply which would lead to a decrease in interest rate which in turn would lead to increase in aggregate investment. These would lead to an increase in economic growth, if properly implemented.

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Section: Model Interpretationsupporting

confidence: 91%

Monetary Policy Instruments and Economic Growth in Nigeria: An Empirical Evaluation

Shaibu¹,

Enofe²

2021

IJARBSS

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“…These outcomes gain support from the previous studies (e.g. Tule et al, 2018;Ufoeze et al, 2018;Fasanya et al, 2013), where they revealed that monetary policy instruments have a long-run relationship with economic growth in Nigeria. Yet, some studies (e.g.…”

Section: Monetary Policy and Economic Growthsupporting

confidence: 83%

Does the monetary policy have any short-run and long-run effect on economic growth? A developing and a developed country perspective

Islam

Hossain

Chakrobortty

et al. 2021

AJEB

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PurposeThe study aims to empirically examine the relationship between monetary policy and economic growth, as well as to explore the long-run and the short-run effect of monetary policy on the economic growth of a developing country (Bangladesh) and a developed country (the United Kingdom).Design/methodology/approachDepending on data availability, the study employed secondary data covering the period of 1980–2019. The augmented Dickey–Fuller test and the Phillips–Perron test were used for the stationarity test. Further, the F-bounds test was run to justify the long-run relationship between monetary policy and economic growth. Thereafter, long-run coefficients were revealed from the auto-regressive distributed lag (ARDL) model and short-run coefficients from the error correction model. Furthermore, the vector error correction model (VECM) Granger causality approach was employed to demonstrate the causality of studied variables. Lastly, different diagnostics tests ensured the robustness of the models.FindingsF-bounds test outcomes suggest that monetary policy has a long-run relationship with economic growth in both countries. Long-run coefficients revealed that money supply has a positive long-run impact on economic growth in both countries. Unlike the UK, the exchange rate exhibits an adverse effect on the economic growth of Bangladesh. The bank rate seems to promote economic growth for the UK. Findings also depict that increase in lending interest rates hurts the economic growth for both countries. Besides, the short-run coefficients portray random effects at different lags in both cases. Lastly, causality among studied variables is revealed using the VECM Granger causality approach.Originality/valueThe novelty of this study lies in consideration of both developing and developed countries in the same study.

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“…Among others, a lack of privatization and capital account openness as well as an absence of competition in MENA banking systems are the main factors behind this negative effect (Anzoategui et al, 2010;Barajas et al, 2011). On the other hand, Maduka and Onwuka (2013) investigate the financial structure and economic growth nexus-both in the long and short runs-revealing that financial deepening has a negative and significant effect on economic growth, particularly in the case of Nigeria. Al-Malkawi and Abdullah (2011) find similar results for the United Arab Emirates (UAE), where they observe a negative relationship between FD and economic growth.…”

Section: Theoretical Background and Relevant Literature Surveymentioning

confidence: 99%

The finance–growth nexus in the Middle East and Africa: A comparative meta‐analysis

Anwar

Iwasaki

2022

Int. J Fin Econ

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By taking 1417 estimates from 96 studies and applying advanced meta‐analysis techniques, this study compares the effect size of financial development (FD) and liberalization on economic growth in the Middle East and Africa. We find that the overall finance–growth nexus is positive, yet its effect size differs across regions. Indeed, finance has a larger growth‐enhancing effect in the sub‐Saharan Africa (SSA) region than in the Middle East and North Africa region. This finding is supported by meta‐regression analysis that controls for various study conditions simultaneously. Moreover, we uncovered that the extracted estimates contain evidence of the true effect size of FD and liberalization on growth in the extant literature and SSA studies.

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Efficacy of Monetary Policy Instruments on Economic Growth: Evidence from Nigeria

Cited by 8 publications

References 27 publications

Monetary Policy Instruments and Economic Growth in Nigeria: An Empirical Evaluation

Monetary Policy Instruments and Economic Growth in Nigeria: An Empirical Evaluation

Does the monetary policy have any short-run and long-run effect on economic growth? A developing and a developed country perspective

The finance–growth nexus in the Middle East and Africa: A comparative meta‐analysis

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