Monetary Policy and the Performance of the Manufacturing Sector in Nigeria (1986-2017)

Abstract

This study examined the effect of monetary policy on the performance of the Manufacturing sector in Nigeria. The explanatory variables are monetary policy rate, Treasury bills rate, Cash reserve requirement and money supply; while the dependent variable is the Manufacturing (MANU) sector output. The study adopted an ex-post facto research design and used secondary data obtained from the CBN Statistical Bulletin. The study covered a period of 32 years (1986 to 2017). The data were subjected to Augmented Dicker Fuller stationarity test to determine the best suitable econometric tool of analyses. The Autoregressive Distributive Lag (ARDL) was used for the model estimation. The results indicate that: monetary policy tools have significant effect on the manufacturing sector output in Nigeria in the short run only. The study thus concludes that monetary policy tools may not be a long run policy instrument for the growth of the manufacturing sector output in Nigeria but rather short run instruments. This study recommended that money supply and treasury bills can be used in the short run as policy instruments to maintain macroeconomic stability in Nigeria with reference to the manufacturing sector.

Monetary Policy and Financial Performance of Consumer Goods Manufacturing Firms: Evidence from Flour Mills Nigeria Plc

“…Hence, the lending difficulties will reduce the rate of investment, output and financial performance. Nevertheless, the result is contrary to the works of Osmond, Egbulonu and Emerenini (2015), Uju and Oguchukwu (2021) and Osakwe et al, (2019) who found a significant positive relationship between monetary policy and manufacturing sector performance.…”

“…The Nigerian government has made intensive efforts at diversifying the economy. The efforts were directed at policies that could enhance the growth of the different sectors of the Nigerian economy including the manufacturing sector (Osakwe, Ibenta & Ezeabasili, 2019). Moreover, understanding the accurate channels of monetary policy to the manufacturing sector can help in achieving sustainable growth and development of any nation's economy.…”

“…Apart from the foregoing development, previous studies on monetary policy and financial performance largely concentrated on the banking sector (Amechi, e tal, 2020;Adesina, Nwidobie & Amadi 2018;Babangida and Khan, 2021;Gimba, vicent & Oyedokun 2020;Kennedy, 2021;Mbabazize et al, 2020;Oparah & James, 2020), economic growth (Ezeibekwe,2020;Srithilat, & Sun, 2017;Ufoeze et al, 2018) and on monetary policy and manufacturing sector (Osmond, Egbulonu & Emerenini, 2015;Osakwe, Ibenta, & Ezeabasili, 2019;Uju & Ogochukwu, 2021). But none of these studies examines the effect of monetary policy on a specific company and they measured manufacturing performance using manufacturing value added to GDP.…”

Response of vegetable oil production to monetary policy in Nigeria

“…This implies that a unit increase in vegetable oil production, commercial loan extended to manufacturing industry, 1 st lag of broad money supply and 1 st lag of prime lending rate made significant positive impact on vegetable oil production at the past. However, Osakwe et al, (2019) reported that unit rise in money supply leads to about 9% increase in the output from the manufacturing sector of Nigeria economy. The coefficients that had negative significant impact on vegetable oil production in Nigeria at the past were current inflation rate, 1 st lag of inflation rate and current broad money supply.…”

Achieving Sustainable Economic Growth in Sub-Saharan African Countries Using the Tool of Monetary Policy Effectiveness

“…Many sub-Saharan African nations like Nigeria have experienced a variety of economic difficulties, including sluggish development and economic instability, despite its abundance of natural and mineral resources (Osakwe, Ibenta, & Ezeabasili, 2019). As a result, unemployment, inflation, non-productivity, and a balance-of-payments deficit remained the norm.…”