Monetary Policy and Balance of Payment in Nigeria ( 1981 - 2012 )

Udude Celina C.

doi:10.12816/0011202

Article Details

Monetary Policy and Balance of Payment in Nigeria ( 1981 - 2012 )

Authors:

Udude Celina C.

Publisher:

Centre for Social Science Research

Main Topics:

Economics and Finance

Journal:

Journal of Policy and Development Studies 2015 Vol.9 Issue 2, pp.14-26

Document Type:

Article

Publication Date:

2/2015

Document Language:

English

Document ID (Org No.):

63633

Frequency:

Quarterly

pISSN:

15979385

DOI:

10.12816/0011202

Descriptors:

Keywords:

Abstract:

 One of the stabilization policies with which the government of Nigeria manages the economy isthat of Monetary Policy. Monetary Policy formulation in Nigeria is usually targeted at achieving somemacro-economic objectives amongst which is equilibrium in the country’s Balance of Payments (BOP) .This work investigated empirically the impact of monetary policy on Nigerian balance of payment. Theresearch was conducted using Ordinary Least Squares (OLS) technique of multiple regression modelsusing statistical time series data from 1980-2010. Secondary data on Balance of Payments (BOP) usedas the dependent variable; broad money supply (M2), Interest rate (INT), exchange rate (EXCR) andgross domestic product (GDP) which represented the explanatory variables, and sourced mainly fromCBN publications were first tested for the presence of unit root using the Augmented Dicey Fuller testwhile Johansen co integration test was used to test for long run relationship between the dependent andindependent variables. The ADF results indicated that all the variables were stationary after firstdifference at 5 and 1 percent level of significance and the Johansen co integration test revealed thepresence of a long run relationship among the variables. Ordinary least square (OLS) technique wasemployed to estimate the individual parameters and the result indicated that the coefficients of M2 andEXCR were positive while those of INT and GDP were negative. However, all the parameter coefficientsexcept interest rate were statistically significant. The study therefore concluded that monetary policyinstruments affect significantly balance of payment and recommended inter alia that Central Bank ofNigeria (CBN) should intensify the process of regular monitoring of the operation of deposit money banksto ensure compliance with prudent guidelines and promote transparency in the banking operations.

Article Details

Monetary Policy and Balance of Payment in Nigeria ( 1981 - 2012 )

Authors:

Udude Celina C.

Publisher:

Centre for Social Science Research

Main Topics:

Economics and Finance

Journal:

Journal of Policy and Development Studies 2015 Vol.9 Issue 2, pp.14-26

Document Type:

Article

Publication Date:

2/2015

Document Language:

English

Document ID (Org No.):

63633

Frequency:

Quarterly

pISSN:

15979385

DOI:

10.12816/0011202

Descriptors:

BALANCE OF PAYMENTS

MONETARY POLICY

MONEY

INTEREST RATES

EXCHANGE RATE

NIGERIA

Balance of Payments

Monetary Policy

broad money supply

Interest rate

exchange rate

Issues

Article Details

Authors: Udude Celina C.

Publisher: Centre for Social Science Research

Main Topics: Economics and Finance

Journal: Journal of Policy and Development Studies 2015 Vol.9 Issue 2, pp.14-26

Document Type: Article

Publication Date: 2/2015

Document Language: English

Document ID (Org No.): 63633

Frequency: Quarterly

pISSN: 15979385

DOI: 10.12816/0011202

Descriptors:

Issues

Authors:

Udude Celina C.

Publisher:

Centre for Social Science Research

Main Topics:

Economics and Finance

Journal:

Journal of Policy and Development Studies 2015 Vol.9 Issue 2, pp.14-26

Document Type:

Article

Publication Date:

2/2015

Document Language:

English

Document ID (Org No.):

63633

Frequency:

Quarterly

pISSN:

15979385

DOI:

10.12816/0011202