Monetary Policy and Financial Stability in the Nigerian Banking Industry

Chukwudi, Oparah Felix; Henry, James Tumba

doi:10.5430/ijfr.v11n1p82

Cited by 5 publications

(3 citation statements)

References 30 publications

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“…In real term, a 1% increase in treasury bills rate resulted in an increase in banking stability index by about 1.09%. This outcome is in agreement with a study carried out by Oparah and James (2020).…”

Section: Estimation Resultssupporting

confidence: 93%

“…This means that a wellimplemented interest rate policy has the ability to streamline instability and crisis in the financial system. On empirical ground, several studies have investigated the link between monetary policy and financial and banking system stability in Nigeria (Ajisafe et al, 2021;Oparah & James, 2020;and Hamilton et al , 2020). This study differs from the previous studies by further examining the impact of monetary policy on banking stability from the angle of banking soundness, using an aggregate Z-score in a more extensive manner to capture banking stability.…”

Section: Introductionmentioning

confidence: 99%

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Monetary Policy and Banking Sector Stability in Nigeria

Didigu¹,

Joshua²,

Okon³

et al. 2022

CBN-JAS

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This study investigates the impact of monetary policy on banking sector stability in Nigeria, utilizing quarterly data for the period 2007Q1 to 2021Q4. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to cointegration. Results show that a long run relationship exist between banking sector stability and monetary policy in Nigeria. Furthermore, monetary policy rate, liquidity ratio, and cash reserve ratio are found to enhance banking sector stability. The study recommends, among others, that cash reserve and liquidity ratios should be kept at levels that will prevent excess liquidity in the system.

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Section: Estimation Resultssupporting

confidence: 93%

Section: Introductionmentioning

confidence: 99%

Monetary Policy and Banking Sector Stability in Nigeria

Didigu¹,

Joshua²,

Okon³

et al. 2022

CBN-JAS

View full text Add to dashboard Cite

show abstract

“…Next, two variables are related to broad money ratios (i.e. broad money to GDP and broad money to reserve ratio) which are associated with financial depth or potential internal drain and liquidity (Nasreen et al , 2017) while total foreign reserve in the month of imports is an important indicator to measure the reserve adequacy (Ciarlone and Trebeschi, 2006). All these variables have a positive impact on FS.…”

Section: Methodsmentioning

confidence: 99%

The impact of green growth on financial stability

Jadoon

Mumtaz

Sheikh

et al. 2021

JFRC

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Purpose The international institutions, policymakers and governments are promoting green growth as a policy objective for global financial stability (FS) without sound empirical investigation. Therefore, the purpose of this study is to investigate whether the green economy would be successful in achieving its main objective i.e. stabilizing the world financial system because the investment stakes are too high for this green transition. Design/methodology/approach The study used the two-step system generalized method of moments (GMM) methodology on panel data of 90 countries for 6 years from 2010 to 2015 to investigate the impact of green growth economy on FS. Findings The results of the current study revealed that overall green growth enhanced FS in the country for both the short and long run. However, the social inclusive dimension of green growth was irrelevant in creating FS. Research limitations/implications The results of the current study validate the growth-led finance hypothesis and encourage the policymakers to strengthen the policy initiative for green growth. Because green growth mitigates economic and environmental risk to create a stable financial environment. However, social inclusiveness needs to be explored through alternate paradigm in relevance to FS. Originality/value As per the author’s knowledge, it is a pioneer study to empirically investigate the impact of green growth on FS which would be useful in understanding the green growth and FS dynamics.

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Financial stability and sustainable development: Perspectives from fiscal and monetary policy

Dinh,

Oanh,

2024

Int. J Fin Econ

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This paper studies the relationship between financial stability and sustainable development from the fiscal and monetary policy perspective in 33 developing countries and 7 developed countries in the period 2005–2020. Bayesian regression results show that financial stability positively affects sustainable development in both groups of countries with a low probability of impact. This probability is above 79.3% in developed countries and above 81.5% in developing ones. When considering the role of monetary policy, the direction of impact and probability is different. Specifically, financial stability in the environment of high inflation and increased money supply (ZscoreInf and ZscoreM2) negatively affects sustainable development in both country groups with high probabilities. In contrast, when considering the monetary policy with the foreign exchange reserves tool (ZscoreER), financial stability positively impacts sustainable development with the probability of 89.6% in developed countries and 92.5% in developing one. When considering the role of fiscal policy, financial stability with government spending (ZscoreGE) positively affects sustainable development with a probability of over 99.7% in the two groups of countries. Meanwhile, tax income in a financially stable environment increases the probability of a positive effect at 100% in developed countries, and a negative effect with a probability of 60.9% in developing countries. From the above results, we propose that central banks in both developed and developing countries should aim to stabilize prices and aim to maintain a low inflation rate to help limit shocks to sudden interest rate changes that cause market volatility. This is a premise to help stabilize finance and promote sustainable development. Furthermore, these countries should maintain an adequate foreign exchange reserve to withstand external shocks and ensure they have enough foreign currency to meet macroeconomic needs, which can boost confidence.

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Monetary Policy and Financial Stability in the Nigerian Banking Industry

Cited by 5 publications

References 30 publications

Monetary Policy and Banking Sector Stability in Nigeria

Monetary Policy and Banking Sector Stability in Nigeria

The impact of green growth on financial stability

Financial stability and sustainable development: Perspectives from fiscal and monetary policy

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