Monetary policy and domestic private sector investment growth in Nigeria
Lawrence Blessing Aturuchi, Wosu Chidi
The study examines the link between monetary policy and private sector investment in Nigeria. The study engaged annual data from 1980-2020 and the variables are private investment, credit reserve ratio, monetary policy rate, minimum lending rate, money supply, open market operation and liquidity ratio. The study engaged Unit Root test for stationarity, Johansen Co-integration and ECM tests to determine the speed of adjustment from the short to its long run equilibrium and examined the trends analysis of the data in the model. Correspondingly, pre-diagnostic and post diagnostic test were carried out to guesstimate the variables. The results indicates that variables are integrated of order 1(1) thereby instituting that the variables are Co-integrated. The ECM (t-1) value of -51per cent displays that it is rightly signed and is capable to correct, adjust and tie the short run dynamics with the long run equilibrium. The post test outcomes divulge that Heteroskedasticity and serial correlation is not a problem in the model. The study similarly ascertains in addition, some level of structural stability in the model using Cumulative Sum (CUSUM) and Cumulative Sum of Square (CUSUMQ) tests. This study concludes that monetary policy spurs private sector investment in the Nigerian economy. The study recommends moderate money supply increase and a reduction in monetary policy rate in the Nigerian economy.
Lawrence Blessing Aturuchi, Wosu Chidi. Monetary policy and domestic private sector investment growth in Nigeria. International Journal of Multidisciplinary Research and Development, Volume 8, Issue 11, 2021, Pages 26-32