Impact of Monetary Policy on Exchange Rate Stability in Nigeria (Published)
This study investigates the impact of interest rates, money supply, and Central Bank reserves on exchange rate stability in Nigeria. Utilizing quarterly economic data from 1980 to 2023, sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin, the research employs a longitudinal survey design to assess the relationships between these monetary variables and exchange rate volatility. The findings indicate that interest rates, money supply, and Central Bank reserves significantly influence exchange rate fluctuations, with Central Bank reserves having the most substantial impact. Specifically, interest rates exhibit a moderate effect on exchange rate volatility (t = 3.513, p = .001, Beta = .342), while money supply also significantly affects exchange rate volatility (t = 2.713, p = .010, Beta = .305). Central Bank reserves, however, have the most pronounced impact (t = 4.141, p = .000, Beta = .467). These results highlight the critical role of monetary policy in maintaining exchange rate stability. The significant positive relationship between interest rates and exchange rate volatility suggests that monetary authorities should carefully consider the ramifications of interest rate adjustments. Similarly, the influence of money supply underscores the need for meticulous management to prevent destabilization. Robust Central Bank reserves emerge as a crucial buffer against exchange rate fluctuations, emphasizing the importance of effective reserve management policies. The findings provide actionable insights for policymakers aiming to enhance exchange rate stability through strategic interest rate policies, careful money supply management, and maintaining adequate Central Bank reserves.
Keywords: Central Bank of Nigeria., Economic Management, Exchange Rate Volatility, Interest rates., Monetary Policy, Money Supply, central bank reserves, exchange rate stability
Internet Finance, Monetary Policy Effectiveness and Bank Credit Channel (Published)
With the information technology boom, the development of Internet Finance is justified to have a notable impact on the effectiveness of monetary policy. In allusion to the development of Internet Finance and changes in monetary policy from 2007 to 2018, this paper takes the bank credit transmission channels as an entry point and builds a Vector Error Correction (VEC) Model based on co-integration analysis. In this paper, we attain the influence of Internet Finance on intermediate targets and ultimate targets of monetary policy with the methods of Co-integration analysis, Granger test, VEC model and so forth by comparing bank credit channels and interest rate channels. The results of the research have revealed that Internet Finance weakens the transmission effect of monetary policy through bank credit channels, improves the market endogenous nature of money supply, which hinders the achievement of the ultimate goal of monetary policy.
Keywords: Monetary Policy, VEC Model, bank credit channel, internet finance
Monetary Policy and the Performance of Nigeria Capital Market: A Time Variant Analysis (Published)
This study examined the relationship between monetary policy and the performance of the Nigerian capital market using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. The objective was to examine the long and short run relationship that exists between monetary policy variables and the performance of Nigerian capital market. Market capitalization and market turnover was modeled as the function of interest rate, exchange rate, monetary aggregates, monetary policy rate and treasury bill rate. The study applied the Ordinary Least Square (OLS) regression technique and causality, unit root, cointegration, vector error correction estimates. Findings revealed that interest rate, exchange rate monetary aggregate and monetary policy rate have positive and significant relationship with market capitalization but treasury bill rate have negative and significant relationship with market capitalization. Monetary policy rate, monetary aggregate and exchange rate have positive relationship with market turnover while Treasury bill rate and interest rate have negative and significant relationship with market turnover. The unit root test found the variables stationary at first difference, the cointergration test validates the presence of long run relationship, the granger causality test proved unidirectional causality while the vector error correction estimates justified adequate speed of adjustment. The study concludes that monetary policy has significant relationship with performance of Nigeria capital market. We recommend that the monetary authorities should ensure effect monetary policy transmission mechanism that will enhance the performance of the capital market.
Keywords: Capital market, Exchange Rate, Monetary Policy, Time Series Monetary Policy Rate
Effect of Government Policy on Price Stability (1990-2015) (Published)
The study determines the effect of government policies in both monetary and fiscal policies on price stability in Nigeria. Secondary data were sourced from CBN statistical bulletin for GR, GE, CRR, MPR & CPI. The study using OLS technique discovered that the combination of both monetary and fiscal instruments impacted on consumer price index in Nigeria within the period of review and concludes that regardless of the mixed individual impacts of the variables; government policies were able to manage consumer price index to a considerable extent. Thus, recommends enhanced fiscal procedures and monetary policies to facilitate desired price stability.
Keywords: Fiscal Policy, Monetary Policy, Price Stability