Reconsidering the nexus between monetary policy and economic growth in Nigeria: The role of interest rate, money supply, and financial inclusion

TERHEMBA İOREMBER P., Jelilov G., Alymkulova N., Yua P. M.

International Social Science Journal, vol.72, no.244, pp.339-351, 2022 (Scopus) identifier

  • Nəşrin Növü: Article / Article
  • Cild: 72 Say: 244
  • Nəşr tarixi: 2022
  • Doi nömrəsi: 10.1111/issj.12324
  • jurnalın adı: International Social Science Journal
  • Jurnalın baxıldığı indekslər: Scopus, Academic Search Premier, IBZ Online, International Bibliography of Social Sciences, Periodicals Index Online, American History and Life, EBSCO Education Source, EconLit, Education Abstracts, Educational research abstracts (ERA), Geobase, Historical Abstracts, Index Islamicus, MLA - Modern Language Association Database, PAIS International, Political Science Complete, Public Administration Abstracts, Public Affairs Index, Social services abstracts, Sociological abstracts, Worldwide Political Science Abstracts
  • Səhifə sayı: pp.339-351
  • Açıq Arxiv Kolleksiyası: Məqalə
  • Adres: Bəli

Qısa məlumat

The empirical evidence on the nexus between monetary policy and economic growth remains ambiguous with mixed and differing results, depending on the country's characteristics, the choice of monetary policy variables employed, and recently, the place of financial inclusion in monetary policy formulation and transmission mechanism. This study explores the nexus between monetary policy and economic growth in Nigeria while accounting for the roles of interest rate, money supply, and financial inclusion over a base period of 2004q1 to 2020q4 and a projected period of 30 quarters. Using the dynamic simulation autoregressive distributed lag (ARDL) model, the study finds that in the short run, only the effect of money supply on economic growth is statistically significant. However, in the long run, interest rate, money supply, and financial inclusion have statistically significant effects on economic growth. The results are supported by the plots of the dynamic simulated ARDL, where economic growth response is predicted at various time periods after forcing a ±1% change (positive and negative shocks) in interest rate, money supply, and financial inclusion. We, therefore, recommend among other things an aggressive financial inclusion strategy with clearly defined deliverables and timelines to reduce the percentage of persons excluded from the formal financial system.