MONETARY POLICY, BANK LENDING AND INFLATION IN NIGERIAN: VAR APPROACH (original) (raw)

Monetary Policy Rate, Interbank Rate, Savings Deposit and Inflation Rate in Nigeria: Evidence from ARDL Approach

This study investigated the impact of monetary policy rate, interbank rate and savings deposit on inflation rate in Nigeria over the period of January, 2006 – November, 2014. To achieve the objective, an autoregressive distributed lag model was employed to estimate both the long-run and short-run models. The result of the long-run model reveals that monetary policy rate, interbank rate and savings deposit were all negatively and significantly affecting inflation rate within the studied period. In similar vein, in the short-run, monetary policy rate and interbank rates were negative and significant in determining inflation fluctuations. Though savings deposit depicts positive sign but was found to be insignificant in the short-run. As such, both long-and short-run findings were in conformity with the theoretical expectations. Therefore, the policy suggestion is that the central bank of Nigeria (CBN) should consider strengthening the use these policy instruments in controlling inflati...

An Empirical Analysis of Bank Lending and Inflation in Nigeria

This paper estimates an inflation model for Nigeria by examining the existence of a significant long-run relationship between inflation and bank lending and to identify the main economic fundamentals that influence the relationship as well as other variables that determined inflation between 1980 and 2008. We make use of the bounds testing approach to cointegration within an autoregressive distributed framework, suggested by Pesaran et al., (2001). In the long run, we find that bank lending and real income emerge as the main determinants of inflation in Nigeria, while fiscal deficits and exchange rates are insignificant. The relationships among the variables are stable and significant.

Monetary Policy and Bank Performance in Nigeria: A Vector Autoregression (Var) Approach

2019

This paper investigated the effectiveness of monetary policy in enhancing the performance of the Nigerian Commercial Banks in terms of their Profitability, Liquidity and Credit performances for the period 1980 to 2017. The monetary policy variables used were, monetary policy rate, Treasury Bill rates, cash reserve ratio and money supply growth. Applying Vector Autoregression analysis (VAR) on the variables, the study found that overall, monetary policy conduct was effective in enhancing commercial banks performance in Nigeria over the period. Specifically, it was found that monetary policy rate and Treasury Bill rates were positively related to profitability of commercial banks in Nigeria. Also, monetary policy rate, money supply and cash reserve ratio were very effective in improving the credit performance of commercial banks in Nigeria. Furthermore, both monetary policy rate and money supply movements produced positive impact on the liquidity performance of commercial banks at var...

The Impact of Monetary Policy on Controlling Inflation in the Nigerian Economy

1980

The core determination of this study is to analytically study the proficiency of monetary policy in controlling inflation in Nigeria. Annual time series data, sourced from Central Bank of Nigeria (CBN) Statistical Bulletins (1990–2019) were used to examine and estimate the three multiple regression models drawn up, with the aid of Software Package for Social Sciences (SPSS). The study modelled inflation rate in Nigerian (dependent variable) as a function of monetary policy (independent variables) made up of monetary policy rate (MPR), treasury bill rate (TBR), savings rate (SR), prime lending rate (PLR), maximum lending rate (MLR), growth of narrow money supply (M1g), growth of broad money supply (M2g), net domestic credit (NDC), net credit to government (NCG) and credit to private sector (CPS). The result shows collinearity that corresponds with the Eigenvalue condition index, and variance constants were less than 0.5. The Durbin Watson statistic shows the absence of multiple autoc...

MONETARY POLICY TREND AND INFLATION IN NIGERIA (1981 -2016

Journal of Management, Applied Sciences and Technology (JOMAT), 2019

This study examined the trend of monetary policy and inflationary process in Nigeria over the period 1981-2016, using the Augmented Dickey Fuller (ADF) test and Ordinary Least Square (OLS) regression. Efforts to reduce the problem of inflation in Nigeria by the monetary policy authorities over the years using a combination of several monetary strategies measure have not yielded positive results. Empirical results indicated that the adoption of monetary targeting is not effective in controlling inflation as interest rate, money supply and real GDP are causes of inflation in the Nigerian economy. The econometric results showed that monetary policy rate has not proved to be more effective than the minimum rediscount rate in curbing inflation in Nigeria. We also found strong evidence of the importance of money supply in the inflation process, lending credence to the dominance of the monetarist proposition on inflation in Nigeria. Thus, the paper recommended among others, the forces of demand and supply should be allowed to determine its rate in Nigeria either exchange or interest rate; monetary authority should find an effective means of reducing money supply in the system and make best use of exchange rate to mitigate inflation; domestic credit made available to borrowers should be controlled to reduce so much money in circulation which in turn could spur inflation.

Inflation, Interest Rate, Exchange Rate in Nigeria: The Long Run Interactions and Monetary Policy Implications

This paper examines the long run relationships among inflation, interest rate and exchange rate in Nigeria along with money supply and output using quarterly data from 2010 to 2018. The study employs Vector Autoregression Cointegration technique in the analysis. The Study reveals that on the average a long run relationship exists among the variables. However, the interactions among inflation, interest rate and exchange rate was weak while money supply and output had significant links with inflation, interest rate and exchange rate. Money supply and output also had significant long run interactions with each other. The findings indicate that the long run path to price stability and economic growth using monetary policy will be through changes in monetary aggregates and increase in domestic production. The study concludes that money supply and output are optimal targets for achieving price stability and economic growth in Nigeria in the long run.