IMPACT OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA (2004 – 2022)

Abstract

Arguments against and in favor of the impact monetary policy of Central Bank of Nigeria have on economic growth in Nigeria is inconclusive with mixed outcomes. Therefore, this study investigates the impact of monetary policy on the economic growth in Nigeria between 2004 and 2022. The study employed ex-post facto design with time series data covering the period of 19 years. Econometric technique of Auto-regressive distributed lag was used to analyzed the study data. Findings of the study revealed that the entire explanatory variables in the study namely; MPR, MS, and LNR at level equation and period of lag one were statistically significant. In terms of the magnitude, finding of the study revealed that the ARDL coefficients of MPR, MS and LNR are 1861.613, 5.091207 and -3778.871. This suggests that both MPR and MS have positive impact on economic growth while LNR has negative impact on economic growth. More so, one percent increase in MPR and MS leads to approximately, 186,161 and 509 percent increase in economic growth. In the same vein, one percent increase in LNR will effect -3778 percent decrease in economic growth. As manifested from the findings of this study, the following recommendations are suggested: that monetary policy authority should ensure that status quo should be maintained on both MPR and MS while adjustment should be made on lending rate (LNR) by reducing the rate to encourage investors to borrow for the purpose of investment and subsequently, economic growth.