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Determining the Optimal Monetary Policy Instrument for Nigeria
No full textIt is considered inapt for central banks to adjust reserve money (quantity of money) and interest rate (price of money) at the same time. Thus, necessitates the need for a choice instrument. Enough evidence abounds in microeconomic theory on the undesirability of manipulating both price and quantity simultaneously in a free market structure. The market, in line with the consensus among economists, either controls the price and allows quantity to be determined by market forces, or influence quantity, leaving prices in the hands of the forces of demand and supply. This paper is, therefore, an attempt to examine the optimal monetary policy instrument for Nigeria between 1981Q1 to 2013Q2 using a bounds testing approach to cointegration. The result indicates the superiority of monetary instrument, followed by combined instrument and then interest rate instrument. The study therefore suggests that the CBN should lay more emphasis on monetary instrument particularly if output growth or stability is the primary goal of monetary policy
Investigating the Dynamics of Bank Credit in Nigeria: The Role of Bank Consolidation
No full textThis paper examines the dynamics of deposit money banks (DMB) credit and the role of consolidation in credit growth in Nigeria using vector error correction model and Granger causality test. The empirical investigation involved DMBs that have maintained a unique name and some market characteristics before and after the 2004 banking sector consolidation. Using quarterly data from 1999Q1 – 2013Q2 of the selected DMBs, the results show a positive relationship between post-consolidation credit supply growth and the real gross domestic product. The results also show that despite the onesided positive causality from credit supply to economic growth, the total contribution of the consolidated credit growth to real activity was not significant. The paper, therefore, recommends that in order to improve the credit channel of monetary policy transmission, policy makers should take into account how the banks react to such policies
Exchange rate management: evolution of the Nigerian foreign exchange market
No full textTo grasp the challenges facing the naira, an understanding of the framework of the exchange rate system is imperative. This article highlights key developments and presents an analysis of the current issues facing the Nigerian currency
Shadow banking services and its implications for the Nigerian economy
No full textThis paper reviews some conceptual and theoretical issues as well as considers the implications of shadow banking services in the Nigerian economy. lt defines shadow 3banking services as \u27a system of credit intermediation that involves entities and activities outside Central Bank of Nigeria\u27s regulatory capture\u27. The paper noted that Nigeria is yet to make significant policy impact on shadow banking in spite of its inherent systemic risk and regulatory arbitrage concerns on the economy. ln addition, there is neither data collection nor information management frameworks to measure its size, performance and impact on the economy. The paper therefore, recommends the design of an appropriate policy framework for shadow banking, efficient information management and the keying-in into FSB\u27s global strategies; and concludes that a properly managed shadow financial activities could be a veritable transmission channel for effective and efficient monetary policy implementation in the economy
Governments\u27 options for financing the Sustainable Development Goals (SDGs) in a period of economic downturn
No full textThe paper reviews the strategies for strengthening the existing sources of traditional finance in Nigeria and also, introduces new sources of innovative finance that will be suitable for funding government development programmes, as well as, the SDGs Agenda 2030. Furthermore, the possible role of the central bank vis a-vis the government fiscal authorities in the management of some sophisticated financial instruments which is increasingly gaining momentum as part of innovative development finance is discussed
Special remarks: Financing Government Programmes in Economic Downturn -The Role of Central Bank of Nigeria? delivered at the 2016 annual executive seminar
No full textThis is the special remarks delivered by the Deputy Governor (Economic Policy) during the 2016 executive seminar, financing government programmes in economic downturn- the role of central bank of Nigeria
Financing government programmes in economic downturn: a comparative analysis
No full textThis paper examines the experience of Nigeria and other oil exporting countries in adjusting to lower oil prices and financing government programmes during economic downturn
Crude oil price volatility: implications for external reserves and exchange rate management in Nigeria
No full textFollowing recent development in the world oil market, emphasis will be placed on the falling crude oil price which has far reaching implications for economic management in Nigeria. Nigeria depends heavily on crude oil for its revenue and exchange earning, hence the degree of rise or fall in oil price over a period poses concern for the government of the country
Queue Modelling for Successful Implementation of the Cash-less Policy in Nigeria
No full textIn line with the realization of the vision of the cash-less policy as being fronted by the Central Bank of Nigeria, this paper seeks to solve problems of long waiting time and queue lengths of customers known to be associated with the queuing system of the Automated Teller Machine (ATM), an indispensable piece of machinery for successful implementation of the policy. To this end, the M/G/1 model, a single-channel queuing model with Poisson arrivals, General distribution service time has been applied in modelling the ATM queuing system across three commercial banks: Guarantee Trust Bank (GTB), Diamond bank and Ecobank all located in Lafia, Nasarawa State Nigeria, in order to reveal the associated queuing problems and proffer solutions via an empirical approach of distribution fitting to real time data of inter arrival and service times. The result revealed problems of long queue length, long waiting time and ATM (Server) over utilization to be common in all the three banks. The result of sensitivity analysis established that, an upgrade of ATM processor speed such that customers spend one (1) minute on the average in service, will ensure that no customer wait in queue and an average utilization of the ATM to check breakdown
Dollarization, Inflation and Interest Rate in Nigeria
No full textThis paper investigates the relationship among dollarization, inflation and interest rate in Nigeria for the period 1986-2015Q1. It adopts inter-temporal model of money-in-utility (MIU) with an estimation technique of structural vector autoregression (SVAR). Empirical evidence shows that dollarization index has been on the increase in Nigeria since 1994, despite stable and low inflation and interest rate. Results of the cointegration show long run equilibrium among dollarization, inflation and interest rate. The Granger causality test reveals that there is a unidirectional relationship from dollarization to inflation in Nigeria. This suggests that policies that aim to reduce inflation in Nigeria must include measures that specifically address the issue of dollarization