Financial Development and Monetary Transmission Mechanism in Nigeria (1986-2017)

Oyadeyi, Olajide; Akinbobola, T. O.

doi:10.20448/journal.501.2020.71.74.90

Cited by 7 publications

(3 citation statements)

References 8 publications

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“…The study found a positive influence of trade intensity on the convergence process and believed that the initial asymmetric nature of the business cycles of West African countries does not represent a hindrance to the convergence process. Furthermore, Oyadeyi and Akinbobola (2020) were of the view that global shocks affect the monetary policy transmission of developing countries. These results were corroborated by other studies, such as Oyadeyi (2022aOyadeyi ( , 2023a and Oyadeyi and Akinbobola (2022).…”

Section: Empirical Issues On Monetary Integrationmentioning

confidence: 99%

Monetary Integration Across West Africa: Is the Region Ripe for a Monetary Union?

Oyadeyi

2024

Sage Open

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This study investigates the possibility of forming a monetary union across West Africa. This was achieved by employing the structural VAR framework. Data on real GDP, inflation, and exchange rate were used to represent supply, monetary, and demand shocks from the period 1986 to 2020. The impulse response and variance decomposition results showed that shocks affecting the West African region are idiosyncratic, while the residuals of the structural VAR were used to compute the correlation coefficient. The correlation coefficient revealed that the demand and monetary shocks were symmetric across WAEMU countries and asymmetric for the rest of the region. The study suggests that the West African region is not ripe for a monetary union. However, the study opined that the WAEMU countries are the closest to forming a West African monetary union and a piecemeal approach may be adopted such that the WAEMU countries are the first to form the union, while the rest may join when they meet the convergence criteria. In essence, West African countries’ central banks need to focus on harmonizing their monetary policies and remove all barriers to factor mobility for the synchronization of shocks and for all countries to meet the convergence criteria.

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Section: Empirical Issues On Monetary Integrationmentioning

confidence: 99%

Monetary Integration Across West Africa: Is the Region Ripe for a Monetary Union?

Oyadeyi

2024

Sage Open

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“…The study also showed that, albeit in a limited way, policy rates in Ghana react to the expansion of mobile money. In Nigeria, Olajide and Temidayo's [3] study uses quarterly data to examine the effects of several components of financial development on the monetary transmission mechanism in Nigeria from 1986 to 2017. The findings revealed that financial development indicators and their interactions with the policy rate had various degrees of impact on each channel of monetary policy.…”

Section: Empirical Reviewmentioning

confidence: 99%

“…A well-developed financial system can attract more foreign investors, which can increase demand for the local currency and help stabilize the exchange rate. Additionally, a more efficient financial system can enable firms to better hedge against exchange rate risk, reducing volatility in the foreign exchange market [3].…”

Section: Introductionmentioning

confidence: 99%

The Disaggregated Impact of Financial Development on the Effectiveness of Monetary Policy in Nigeria

Adamu¹,

Oladipo

Umaru³

2023

JEMT

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The fast development in the financial system has attracted researchers’ interest in studying its implication on the economy, though empirical evidence is highly limited on disaggregated levels. This study is undertaken to examine the impact of disaggregated financial development on the effectiveness of monetary policy in Nigeria. The study used Autoregressive Distributed Lag Model to capture the data-generating process as well as both short-run and long-run relationships. The scope of analysis ranged from 2000 quarter 1 to 2021 quarter 4 to circumvent the effect of regime changes, as the chosen time horizon represents the period of the uninterrupted civilian regime in Nigeria. The data are sourced from the Central Bank of Nigeria’s and the International Monetary Fund’s statistical databases. Moreso, quarterly frequency data are used to reflect the short-run nature of the monetary policy. The finding reveals financial market development enhances the effectiveness of monetary policy in terms of achieving both its primary and secondary objectives while financial institutions development does not. Given the findings, it is recommended that the Government together with the Central Bank of Nigeria should design policies that would enhance the efficiency of the financial market, particularly markets infrastructure and technology-based products to reduce information asymmetry and transactional costs to ease the way of doing business.

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The Velocity of Money and Lessons for Monetary Policy in Nigeria: An Application of the Quantile ARDL Approach

Oyadeyi

2024

J Knowl Econ

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The paper investigates the determinants and stability of the income velocity of money while accounting for structural breaks in its approach from the period Q1 1981 to Q4 2023 in Nigeria. The paper extends previous works by accounting for four velocities of money functions having accounted for structural breaks in its approach. The study adopted the Bai and Perron breakpoint test, the Zivot and Andrews, and Perron and Vogelsang structural break unit root tests to determine the break dates and the variables’ stationary properties. In analyzing the main results, the study used the quantile ARDL method to establish the determinants of income velocity of money in Nigeria, while it used the CUSUM tests to establish the stability of money velocity in Nigeria. The study found that the determinants of the velocity of money are per capita income, the exchange rate, financial development, inflation, and the interest rate across the four models. Furthermore, the four velocities of money functions were unstable for Nigeria using the cumulative sum and cumulative sum of squares tests. Consequently, the study recommends effective monitoring and the provision of sound monetary policies to ensure a stable and predictable velocity of money. This can be achieved by understanding and focusing on these key determinants and crafting informed strategies to manage economic growth and stability. This holistic approach ensures that the benefits of economic policies are felt broadly across the economy, ultimately bolstering overall financial health and enhancing the velocity of money, which is crucial for sustained economic progress.

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Financial Development and Monetary Transmission Mechanism in Nigeria (1986-2017)

Cited by 7 publications

References 8 publications

Monetary Integration Across West Africa: Is the Region Ripe for a Monetary Union?

Monetary Integration Across West Africa: Is the Region Ripe for a Monetary Union?

The Disaggregated Impact of Financial Development on the Effectiveness of Monetary Policy in Nigeria

The Velocity of Money and Lessons for Monetary Policy in Nigeria: An Application of the Quantile ARDL Approach

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