Influences of Monetary Policy Instruments on Domestic Investments and Economic Growth of Nigeria: 1970-2018
Keywords:Private, Economy, Growth, Influence, Investment, Money, Domestic, Policy.
This study tagged influence of monetary indicators on domestic investments and growth of Nigerian economy: 1970-2018, main aim is to ascertain the degree of effects of monetary variables on domestic investment and economic growth. Annual data on the following variables: private domestic investment (PDI), economic growth rate (EGR), narrow money supply (NMS), Commercial bank credit to private Investors (CCP), Commercial bank interest rate (CLR), naira-dollar ratio (NDR) and inflation rate (INR) were extracted from diverse sources. ADF and PP approach as well as ARDL Model were employed for the study. Generally, findings revealed that PDI is influenced positively and significantly at 5% LOS by one period log of PDI and CCP in Nigeria within 1970 and 2018. Also, NMS impacted negatively on domestic investments. It implies that available narrow money supply was utilized majorly by the government sector of the economy with little investment money left for private investors. Results further indicated, that monetary indicators such as NDR, CLR and EGR had no significant influence on domestic investments in the study period. Other findings showed that PDI, NMS and NDR were significant to explained EGR in this period of study. Lagged EGR variable appeared insignificant. Given the results and analysis made, conclusion is drawn that key monetary variables which explained PDI and EGR are mainly money supply and Commercial bank credit. It is therefore recommended that monetary policy moves that would ensure availability of more money and credit to private investors are vigorously pursued.