Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020)
In auspicious macroeconomic setting, monetary policy should increase credit availability, particularly in the real sector, to spur investment; however, this is not the case in the Nigerian economy. In this study, the impact of monetary policy on bank credit and investment in Nigeria from 1981 to 202...
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| Format: | Article |
| Language: | English |
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Academic Research and Publishing UG
2023-03-01
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| Series: | Financial Markets, Institutions and Risks |
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| Online Access: | https://armgpublishing.com/wp-content/uploads/2023/03/9_FMIR_1_2023.pdf |
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| author | Aanuoluwapo Adebisi Olonila Ditimi Amassoma Bayode Olusanya Babatunde |
| author_facet | Aanuoluwapo Adebisi Olonila Ditimi Amassoma Bayode Olusanya Babatunde |
| author_sort | Aanuoluwapo Adebisi Olonila |
| collection | DOAJ |
| description | In auspicious macroeconomic setting, monetary policy should increase credit availability, particularly in the real sector, to spur investment; however, this is not the case in the Nigerian economy. In this study, the impact of monetary policy on bank credit and investment in Nigeria from 1981 to 2020 was investigated. The central bank of Nigeria's statistics bulletin was the source of the data used in this study. Using the data gathered, the study used Auto-Regressive Distributed Lag (ARDL). The study’s findings indicate that bank loans and investment have a long-term association with monetary policy. In addition, it was observed that while bank loans to the private sector and the liquidity ratio had short-term negative effects on investment, the cash reserve ratio, monetary policy, money supply, and inflation rate had long-term positive effects on investment. According to the study's findings, monetary policy significantly and favorably affects bank credit and investment in Nigeria. The study suggested that the CBN adjust the monetary policy rate by reducing the cash reserve ratio, which will increase liquidity and allow the banks to discharge their credit capacity with the aim of improving investment in Nigeria. Monetary authorities should view credit as a major channel for implementing monetary policies, and this urgent adjustment should be made. |
| format | Article |
| id | doaj-art-9f3bbd1edcdc4e869d2eb347c01c7404 |
| institution | OA Journals |
| issn | 2521-1250 2521-1242 |
| language | English |
| publishDate | 2023-03-01 |
| publisher | Academic Research and Publishing UG |
| record_format | Article |
| series | Financial Markets, Institutions and Risks |
| spelling | doaj-art-9f3bbd1edcdc4e869d2eb347c01c74042025-08-20T02:09:35ZengAcademic Research and Publishing UGFinancial Markets, Institutions and Risks2521-12502521-12422023-03-017113614410.61093/fmir.7(1).136-144.2023Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020)Aanuoluwapo Adebisi Olonila0https://orcid.org/0009-0006-4793-4873Ditimi Amassoma1https://orcid.org/0000-0003-4684-7007Bayode Olusanya Babatunde2https://orcid.org/0000-0003-3228-3378Postgraduate Student, Department of Economic, Faculty of Social Sciences, Federal University of Oye Ekiti, Ekiti State NigeriaProf., Department of Economics, Faculty of Social Sciences, Federal University Oye Ekiti, Ekiti State, NigeriaPhD, Department of Business Administration, Faculty of Management Sciences, Osun State University, NigeriaIn auspicious macroeconomic setting, monetary policy should increase credit availability, particularly in the real sector, to spur investment; however, this is not the case in the Nigerian economy. In this study, the impact of monetary policy on bank credit and investment in Nigeria from 1981 to 2020 was investigated. The central bank of Nigeria's statistics bulletin was the source of the data used in this study. Using the data gathered, the study used Auto-Regressive Distributed Lag (ARDL). The study’s findings indicate that bank loans and investment have a long-term association with monetary policy. In addition, it was observed that while bank loans to the private sector and the liquidity ratio had short-term negative effects on investment, the cash reserve ratio, monetary policy, money supply, and inflation rate had long-term positive effects on investment. According to the study's findings, monetary policy significantly and favorably affects bank credit and investment in Nigeria. The study suggested that the CBN adjust the monetary policy rate by reducing the cash reserve ratio, which will increase liquidity and allow the banks to discharge their credit capacity with the aim of improving investment in Nigeria. Monetary authorities should view credit as a major channel for implementing monetary policies, and this urgent adjustment should be made.https://armgpublishing.com/wp-content/uploads/2023/03/9_FMIR_1_2023.pdfauto regressive distributed lag (ardl)money supplyliquidity ratioinflationbank credit |
| spellingShingle | Aanuoluwapo Adebisi Olonila Ditimi Amassoma Bayode Olusanya Babatunde Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020) Financial Markets, Institutions and Risks auto regressive distributed lag (ardl) money supply liquidity ratio inflation bank credit |
| title | Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020) |
| title_full | Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020) |
| title_fullStr | Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020) |
| title_full_unstemmed | Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020) |
| title_short | Impact of Monetary Policy on Credit and Investment in Nigeria (1981 – 2020) |
| title_sort | impact of monetary policy on credit and investment in nigeria 1981 2020 |
| topic | auto regressive distributed lag (ardl) money supply liquidity ratio inflation bank credit |
| url | https://armgpublishing.com/wp-content/uploads/2023/03/9_FMIR_1_2023.pdf |
| work_keys_str_mv | AT aanuoluwapoadebisiolonila impactofmonetarypolicyoncreditandinvestmentinnigeria19812020 AT ditimiamassoma impactofmonetarypolicyoncreditandinvestmentinnigeria19812020 AT bayodeolusanyababatunde impactofmonetarypolicyoncreditandinvestmentinnigeria19812020 |