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EMPIRICAL ANALYSIS OF MONETARY POLICY AND ITS EFFECT ON PRIVATE SECTOR GROWTH IN NIGERIA (1990-2018)
Abstract: The study empirically analyzed monetary policy and its effect on private sector growth in Nigeria; for the period 1990-2018. Secondary data were used and collected from the Central Bank of Nigeria Statistical Bulletin. The study used Private Sector Output is proxy for Private Sector growth and employed as the dependent variable; whereas, broad money supply, liquidity rate and Credit Ratio respectively were used as the explanatory variables to measure monetary policy. Hypotheses were formulated and tested using time series econometric techniques. The study revealed a significant effect of credit ratio on private sector output in Nigeria. Liquidity ratio had a significant effect on private sector output in Nigeria. Broad money supply had a significant effect on private sector output in Nigeria. Hence, there is a long-run equilibrium effect on monetary policy and the private sector economy in Nigeria; and, the result confirms that about 73% short-run adjustment speed from long-run disequilibrium. The coefficient of determination indicated that about 65% of the variations in private sector led- economy can be explained by changes in monetary policy variables. The study concluded that monetary policy had impacted significantly on private sector growth in Nigeria. The study recommended that strong macroeconomic policies should be employed to maintain and stabilize the economy. CBN should lay down strict prudential guidelines to stabilize and strengthen the private sector ledeconomy. Government and policy makers should formulate policies that will increase the flow of investable funds and improves the capacity of private economy.
Keywords: Empirical Analysis, Monetary Policy, Private Sector, Growth, Nigeria