ABSTRACT
Money supply is one of the important macroeconomic
variables. The control of money supply is an essential tool in conducting
monetary policy within the monetary targeting framework. The success of
monetary policy critically depends on the controllability the monetary
authority has over money supply.
In view of this, this research work aimed at
identifying the variables that determine money supply in Nigeria, specifies the
correct relationships between these variables and money supply as well as to
provide statistical evidence vis-a-vis the relationship in Nigeria, and also
examines the most current important issues and questions in Nigerian money
supply determination. Thus, the thesis lays emphasis in monetary policy as well
as the viability of money supply and its determination in Nigerian economy. The
period covered is 1983 to 2008.
In the course of determining the relationship, the
study applied the econometric technique- Ordinary
least squares Estimates (O.L.S.E), Error correction model (E.C.M) to time series data. More so, correlation matrix, percentage proportion and
co-integration technique using, the unit root and granger causality test is
used to verify the stationarity of the time series in order to avoid analyzing
inconsistent and spurious relationship in the model, thus, ascertain whether
past value helps to explain current value.
From the regression result, it was found
that all the variables put forward i e money supply in the last period,
domestic credit to public sector, domestic credit to private sector, net
foreign assets and net of other items were significant in explaining money
supply determination in Nigeria. By implication, Using Standard Granger
Causality test, this study demonstrates that money supply in Nigeria for the
period 1980-2003 is not exogenously determined.
TABLE OF CONTENT
Page
Title i
Certification ii
Declaration iii
Dedication iv
Acknowledgment v
Table of Content vi
List of Table / Figure ix
Abstract x
CHAPTER ONE:
1.0 Introduction
1
1.1 Statement
of Problem 12
1.2 Motivation
and Objectives of the Study 13
1.3 Significant
of the Study
15
1.4 The
Scope of the Study 16
1.5 Research
Questions 17
1.6 Hypotheses 18
1.7 Method
of Data Collection
18
CHAPTER TWO:
BACKGROUND AND ISSUES TO MONEY
SUPPLY DETERMNATION
2.0 Introduction 19
2.1 Three
Competing Models of the Money Supply
22
2.1.1 The
Portfolio Choice Money Multiplier Models 22
2.1.2 A Pure
Loan Demand Model 25
2.1.3 A Mixed
Portfolio-Loan Demand Model.
29
2.2 The
Nigerian Experience 35
CHAPTER THREE
LITERATURE REVIEW
3.0 Introduction 60
3.1 General
Review on the Definition of Money Supply
60
3.2 General
Review on Money Supply Determination
68
3.3 Practical Evidence from Nigerian Economy
on
Money Supply Determination 78
3.4 Theoretical Review on Money Supply And
Economic Growth 85
3.5 Theoretical Review on Monetary Policy Transmission Mechanism 94
3.6 Financial Sector Development and
Economic Growth 102
CHAPTER
FOUR
ANALYTICAL
FRAMEWORK AND METHODOLOGY
4.0 Introduction 107
4.1 Analytical Framework 109
4.1.1 Technique of Monetary Control 112
4.1.1.1 Public
Sector Domestic Credit (Ndcg) 113
4.1.1.2 Private
Sector Domestic Credit 114
4.1.1.3 Net
Foreign Assets (Nfa) 115
4.1.1.4 Net
Other Items (Oa1) 116
4.2 Methodology 116
4.2.1 Model Specification 117
4.2.2 Data Source 121
4.2.3 Data Processing 121
CHAPTER FIVE
DATE PRESENTATION AND ANALYSIS
5.0 Introduction 123
5.1 Presentation of Data 123
5.2 Correlation Matrix Result 123
5.3 Percentage Composition of Money Supply (M2)
124
5.4 Time Series Properties 126
5.4.1 Unit Root
Analysis
127
5.4.2 Augmented Dickey-Fuller (ADF)
Test for Unit Root 127
5.4. 3 Co-Integration
Test and Results 129
5.4.4 Granger Causality
Test 130
5.4.5 Parsimonious
Error Correction Model
132
5.4.6 Interpretation of
Empirical Result 134
5.4.7 Test for
Sterilization 137
5.5 Policy Implication Of Results 139
CHAPTER SIX
SUMMARY, CONCLUSION AND
RECOMMENDATION
6.0 Introduction
141
6.1 Summary
141
6.2 Conclusion
143
6.3 Recommendation 146
LIMITATION OF THE STUDY
152
REFERENCE
153
APPENDIX
161
LIST OF TABLE / FIGURE
LIST OF TABLE
3.1 Proportion of Monetary Control in Nigeria 84
3.2 Trend of Selected Monetary and Economic
Aggregate 90
4.1 Selected Indicators of Money Supply
Management
in Nigeria 109
5.2 Summary of Correlation Matrix Result 124
5.3 Percentage Composition of Money Supply
(M2) 126
5.4.2 ADF Test for Unit
Root 128
5.4.3 Johansen Test for
Co-Integration 129
5.4.4 Pairwise Granger
Causality Test 131
5.4.5 Result of
Parsimonious Error Correction Model
133
5.4.7 Result of
Sterilization Test 138
LIST OF FIGURE
5.4.6 Money Supply
(Mst) Function 137
5.4.7 Sterilization (DCp)
Function 139
CHAPTER ONE
1.0.
Introduction
Money
supply mechanism has been receiving increasing attention than any other subject
matter in the field of monetary economics in recent years. Because of the
importance of money supply via monetary policy in achieving macro-economic
objectives of nations (developed and developing), persistent concern has
always been given among monetary economists including Ajayi (1972), Mckinnon
(1973), Shaw (1973), Oyejide (1974), Fry Mathieson (1980), Ojo (1993), Ghatak
(1995), Odedokun (1996), Levine (1997), Tomori (1984) ,Asogu (1998)
, Ogun and Adenikinju (2004), and Owoye and Onafowora (2007) to the process of
money supply and its determination.
The
control of money supply is an important policy tool in conducting monetary
policy within the monetary targeting framework. The success of monetary policy
critically depends on the degree of controllability that the monetary authority
has over money supply. The implicit assumption is that the central banks can
determine the growth of money supply, and the level of
money stock is the product of two components: the monetary multiplier and the
monetary base. The monetary base is the quantity of government-produced money.
It consists of currency held by the public and total reserves held by banks. Doguwa (1994).
According
to Bhole (1987), Monetarists in general, argue that the monetary authorities
can exercise effective control over the stock of money while the
non-monetarists on the other hand, hold that the determination of stock of money is part of the
simultaneous solution for all variables in the financial and real sectors
of the economy. He further states that apart from policy action by the central
banks, money stock is determined by the behaviour of the public in various
asset and commodity markets. Opposing such non-monetarist arguments, the
monetarists argue that the behavioural patterns of the public and the banking
system are stable and predictable enough to permit the monetary authorities to
control the stock of money. While such opposing views have been widely debated,
empirical evidence on the issue is critical to conducting monetary policy in practice.
Akhtar, (1997) and CBN, (1995), opine
that monetary policy influences the level of money stock and/or interest rate,
i. e. availability, value and cost of credit in consonance with the level of
economic activity. Macroeconomic aggregates such as output, employment and
prices are, in turn, affected by the stance of monetary policy through a number
of ways including interest rate or money; credit; wealth or portfolio; and
exchange rate channels
However,
Akinnifesi and Philllip (1978), in their effort, to examine the determinants
and control of money stock in Nigeria, argue that, monetary authorities apply
discretionary power to influence the money stock and interest rate to make
money either more expensive or cheaper depending on the prevailing economic
conditions and policy stance, in order to achieve price stability. This is why
Wrightsman (1976), concludes that monetary policy is nothing but a deliberate
attempt to control the money supply and credit conditions for the purpose of
achieving certain broad economic objectives. In general, most monetary
authorities or central banks have been saddled with controlling inflation,
maintaining a healthy balance of payments position to safeguard the external
value of the domestic currency and promoting economic growth.
While
attempting to identify the appropriate definition of money in Nigeria, Ojo
(1978) adopted Chetty’s theoretical approach with the use of 1961-79 data and
found that the wider definition of money is more appropriate when measuring
national income in the Nigerian economy. Uchendu (1997) however, in an attempt
to establish a relation between monetary base and money supply defines money
supply from the Central Bank balance sheet accounting framework as (M1)
is the sum of currency in circulation C, and deposits D. Thus, M1=
C+D, and from the broader definition M2 = C+D+TD, where
TD = time deposit
More so,
Nnanna, (2002) and Ojo, (2001) in the process of identifying the assets and
liabilities of the financial sector, define money supply (M2) which
is the expanded of narrow measure of money (M1) to
include time and saving deposits at the money banks (DMBs) which is also term
Quasi-money (QM) which are not directly useable as a means of payment but can
in practice be converted into generally acceptable means of payment. Thus, M2
= M1 + QM
In general
terms, money supply could be defined as comprising narrow and broad money. The
narrow money (M1) includes currency in circulation with non-bank
public and demand deposits or current accounts in the banks. The broad money (M2)
includes narrow plus savings and time deposits as well as foreign denominated
deposits (CBN, 2010).
However,
Ogunmuyiwa and Ekone (2010), in analyzing the relation between money supply and
economic growth, opined that the broad money measures the total volume of money
supply in the economy. Thus, excess money supply (or liquidity) may arise in
the economy when the amount of broad money is over and above the level of total
output in the economy. They further
stress that the need to regulate money supply is based on the knowledge that
there is a stable relationship between the quantity of money supply and
economic activity that if its supply is not limited to what is required to
support productive activities, it will result in undesirable effects such as high
prices or inflation
Oyejide (2004), stresses
the importance money supply in the study of inflation and its effect on
aggregate demand. Availability of money makes demand effective i.e. it enable
such demand to be translated to reality. But if production level in an economy
cannot sustain the level of aggregate demand. The excess demand will bid up
general price level thereby bringing about inflation. Hence, the need to
maintain suitable balance between this is done to provide for easy analysis.
Government aspiration
towards the achievement of broad economic objectives could be pursued by means
of monetary policy strategy among others. Monetary policy
refers to a combination of measures designed to regulate the value, supply and
cost of money in an economy, in consonance with the expected level of economic
activity Nnanna, (2001). Some other theorists refer to monetary policy in terms
of the central bank actions to influence and/or target some measures of the
money stock. However, the definition of monetary policy often incorporated in
theoretical models focus more on the measure of high powered liabilities of the
central bank. This definition was the foundation of the monetarist revolution
in the 1960s and 1970s (Rasche and Williams, 2007: 447).
In another strand, monetary policy is
perceived as the high powered liabilities of the central bank. Such proponents
ordinarily refer to monetary policy as the central bank actions to influence
and/or target short-term interest rates or nominal exchange rate. However,
Sargent and Wallace (1975) have contended that in a model with “rational
expectations”, the price level (and all other nominal variables) could be
indeterminate if the central banks set targets for nominal interest rates,
because the economy would lack a “nominal anchor”. McCallum (1987) advanced the
argument and showed that an appropriately defined interest rate rule which
include a “nominal anchor” would avoid such indeterminacy.
In the US, in the early years of
Greenspan, interest rate rules that include a 'nominal anchor' in the form of a
desired or target inflation rate became the basic specification of 'monetary
policy' in theoretical discussions. These various definitions of monetary
policy are influenced in part by developments in monetary theory and in part by
interpretations of monetary history. Thus, the changing role by the definition
of monetary policy is but something of a moving target. Rasche and Williams
(2007:448).
In the last three decades the discourse
on the effectiveness and role of monetary policy is still a major debate in
macroeconomics. The risk of 'monetarism' subsequent to the works of Friedman
and Schwartz (1963); Anderson and Jordon (1968); Meltzer (1976 and 2003) have
presented several planks. Firstly, some monetarists contend that sustained
inflation was a monetary phenomenon and that central banks should be held
accountable for maintaining price stability. The contention here is that
central banks should control the stock of money in the economy rather than focus
on targeting short-term nominal interest rates as a mechanism to achieve
long-run inflation objective. (The reason for this is that, in a fiat money
economy, the money stock provided the nominal anchor for the system (Rasche and
William, 2007).
There are some other monetarists from
the above group who equally believed that inflation control was not the only
concern of the monetary authorities. Anderson and Carlson (1970) viewed
monetary policy as having significant effects on short-run fluctuations in real
output, though it does not affect long-run output growth. Meltzer (1976, 2003)
among others believe that monetary policy was responsible for the historical
cyclical fluctuations in real output.
In the 1970s and early 1980s,
macroeconomics witnessed the plantation revolution of the “rational
ineffectiveness proposition” of the New Classical Macroeconomics. Some common
works during this era were Sargent and Wallace (1975); Fischer (1977); Taylor
(1980), among others. The initial interpretations of the rational expectations
paradigm were that, if expectations are rational, they would render monetary
policy ineffective in influencing real output both in the short-run and
long-run. Thus, monetary policy has no role in output stabilization. Further
demonstration eventually revealed that it was the interaction of the rational
expectations and perfectly flexible wages and/or prices assumptions that
generated the “policy ineffectiveness proposition”. This integration of
ideology saw an emergence of a new thought known as the “New Keynesians”. The
popularity of the New Keynesian models has eventually eroded the monetarist
tenets of how monetary policy affects economic activity. Money in this cycle is
less often spoken about especially when included in the discourse on
“inflation”. King (2002) equally cited in Rasche and Williams (2007:449) notes
that:
“There is a paradox in the role of money in
economic policy. It is this: that as price stability has become recognized as
the central objective of central banks, the attention actually paid by central
banks to money has declined” (p. 162).
The implication of this is that
although monetary policy is essential in economic growth and development
process of modern economies, its role in macroeconomic policy objective is
becoming more passive. This is because its fundamental role has been
streamlined to price stability and in recent times inflation targeting.
In contemporary literature and policy
discussions, on some economies (New Zealand, Norway, Switzerland, Thailand, UK,
Chile, Hungary, Colombia, Canada, etc), more attention is given to the role of
an inflation objective in a central bank 'policy rule' as the nominal anchor.
This constitutes the basis of the discussion on inflation targeting. Inflation
targeting is a framework for policy decisions in which the central bank makes
an explicit commitment to conduct policy to meet a publicly announced numerical
inflation target within a particular time frame (Egbon, 2006).
As so far reported in the literature on
inflation-targeting, a number of inflation targeting countries as listed above
have recorded effectiveness in their monetary policy and that central banks
that have announced explicit numeric inflation objectives have been quite
effective in achieving the stated inflation stabilization objective (Rasche and
Williams, 2007); however, this is not without some problems in the
implementation.
In Nigeria, the Central Bank of Nigeria
(CBN) is the sole monetary authority. Its core mandate is to promote monetary and
price stability and evolve an efficient and reliable financial system through
the application of appropriate monetary policy instruments and systemic
surveillance. The 1958 Act establishing the Central Bank of Nigeria gave it the
following specific functions (which have endured in the 2007 CBN Act):
·
issuance
of legal tender currency notes and coins in Nigeria;
·
maintenance of Nigeria's external
reserves;
·
safeguarding
the international value of the currency;
·
promotion and maintenance of monetary
stability and a sound and efficient
·
financial
system in Nigeria; and
·
Acting
as banker and financial adviser to the Federal Government.
According to Omotor, (2007), embedded
in these objectives are two separate but highly related roles: A developmental role and financial
surveillance (stability) role. The roles demand, among others, that the CBN
focuses on both price stability and growth. In order to ensure the realization
of the goals of price stability and economic growth, the CBN deploys its
monetary policy instruments in such a way as to ensure optimality in inflation
and growth outcomes. It follows, therefore, that the efficient conduct of
monetary policy is a major responsibility of the Central Bank of Nigeria. This
is also true of most central banks.
Monetary
policy therefore, involves the adjustment of money stock, to influence the
level of economic activity and inflation in a desired direction Teigen, (1995).
It is a combination of measures designed to regulate the value, suppliers and
the cost of money in an economy in line with the expected level of economic
activity Ojo, (1992). Monetary policy is construed to be actions by the
monetary authorities to influence the national economic objectives by
controlling or influencing the quantity and direction of money supply, credit
and the financial accommodation for growth and development programmes, on the
one hand, stabilizing various sectors of the economy for sustainable growth and
developments, on the other hand.
Monetary
policy is also defined by Johnson (1962) as policy employing the central bank’s
control of the money supply as an instrument for achieving the objectives of
economic policy. Similarly, from a synthesis of most of the literature and in
the context of the Nigerian situation, Ubogu (1985) defines monetary policy as
an attempt by the monetary authorities to influence the level of aggregate
economic activities by controlling the quantity and direction of money and
credit availability.
An issue which has occupied the minds of governments
for decades is the effectiveness of monetary policy in influencing economic
variables, and money supply is a key variable to the understanding of monetary
policy and its effectiveness. The majority of studies on finance in Less
Developed Countries (LDCs) have concentrated on long or medium-term issues, but
studies on short-term issues of money and finance have been sparse.
Empirically-oriented studies in this area have been hampered by the lack of
concrete information and data (Fakiyesi, 1999). Moreso, in Nigeria, research in
the area of monetary policy especially on money supply determinants have been
minimal when compared with the efforts into other components of the financial
sector such as financial reform, trade liberalization and exchange rate. Even
when research is available on money supply, the emphasis has been on the
portfolio, stability, and mechanism of money supply.
Ajayi (1972), in a critique, examines the money
multiplier Approach to money supply determination. In a related issue, Ajayi
and Ojo (1981), analyze money supply in Nigeria, and specified behavioural
model that exist among the money stock, high-powered money and money
multiplier. Tomori (1984), among other issues, examines the proportion of money
stock in Nigeria that is accumulated by the Central Bank. Uchendu (1997),
investigates the relationship between money supply and base money in Nigeria,
and tends to explain the stability of the relationship. More so, Doguwa (1994),
analyses the stability of money multiplier in Nigeria by comparing the
explanatory powers of the regression of the growth of money stock on the
monetary base. While, the CBN’s Research Department (1990, 1991), Oriesotu
(1993), Oke (1993, 1994), tend to articulate theoretically, the basis for the
operation of the indirect method of monetary control in Nigeria, Akinnifesi and
Phillip (1978) and Oriesotu (1993), examine the implication of the indirect
approach on monetary stock control in Nigeria. Ogun and Adeenikinju (2004),
investigate and analyze the process of money supply mechanism in Nigeria.
Equally, efforts have been made to investigate the impact of the impact of
money supply on economic growth in Nigeria, Ogunmuyiwa and Ekone (2010).
It is also well-known that in less-developed
countries, there is a tendency to predicate monetary and financial policy on
models are which are in the spirit of the money multiplier analysis (Taylor,
1974; Coats and Khatkhate, 1978; Ajayi, 1981 and Fry, 1978). This is in spite
of the fact that when policies are predicated on such models, they do not
reflect the true structure and process of money supply in these countries.
These models tend to misrepresent; therefore the true nature and process of
money supply and thereby likely to mislead policymakers. It is therefore with
this background in view, that this study is undertaken.
1.1 The Statement of the
Problems
An
understanding of the potency of monetary policy and transmission mechanism of
the aggregate money is very important to the success of monetary policy. An
efficient implementation requires policy makers to know the direction the
policy could take to impact on the macro economy and the time lag of the
impact. Key policy issues in the current policy framework arise. For example,
do changes in reserve money actually lead to change to money broadly defined (M2)
and/or inflation? If so, how long do these changes take to impact inflation?
Thus inflation would then aid policy maker to know which instrument are useful
and which time horizon should be used to target inflation.
Conducting
monetary policy is a difficult task since it affects the economy with a lag.
Achieving goals requires some ability to peep into the future. Consequently,
decision makers should make forecast to assist in policy formulation. To
conduct this forecast, most central banks take a number of variables into
account. An aspect of this thesis attempts to evaluate the information content
of monetary aggregate used by the central bank of Nigeria to target inflation
and other key variables such as interest rate, domestic dept and exchange rate,
which have the potential of being useful indicators of inflation. The more open
the economy, the greater the importance of the exchange rate in the policy
process and the more important this variable becomes as an optional policy
tool.
Thus,
the very nature of economic activity in Nigeria gives room for so many
questions and problems that beg for urgent attention.
There
is inflationary acceleration in money supply in the country.
There
is unstable general price level which is always moving up
There
is high level of unemployment in the country
There
is wide gap between saving rate and interest rate which is not encouraging
savings as well as deterring borrowing.
The
level of economic activity in the country coupled with the global financial
crisis show that there are plethora problems in the economy Thus, there is need
for effective monetary policy vis-à-vis the estimation of money supply, which
is an unavoidable task of Economists.
1.2
Motivation and Objective of the Study
In
addition to the arguments in the concluding part of introduction section above,
the desirability of a sound micro-economic foundation for macro-economic policy
has assumed increasing importance in recent times. In order to provide a solid
foundation and to allow monetary policy to be conducted to the best advantage
of a given country, it is necessary to develop a satisfactory model of money
supply. Such a model would be an indispensible tool for understanding the
working of monetary transmission mechanism in the economy. Such model may also
act as a prerequisite for understanding better the workings of the financial
sector, especially as it reflects the role of the sector within the economy in
general and the importance of money supply and other financial variables in
particular.
The aim
of this study is to look at the factors that affect money supply in the Nigeria
context and also examine the most current important issues and questions in the
Nigeria money supply determinations. The primary purpose of this study is to
critically examine the supply of money in Nigeria in the period 1983 – 2008 and
also identify the variables at play in determining money supply in the Nigeria
economy. Thus, the research work lays emphasis on the monetary policy as well
as the viability of money supply and its determinants in Nigeria economy. The objectives
of this research work could be itemized as follows;
·
To examine
the balance sheet of the central bank of Nigeria (CBN) and the deposit of money
banks (DMBs) from 1983 to 2008.
·
To consolidate the
balance sheet of the financial sector, thus, identify the monetary assets and
the liabilities of the financial institutions within the period of study.
·
To examine
the aggregate domestic credits and establish empirically its impact on money
supply within the period of study.
·
To determine
the causal links between the foreign assets and the monetary aggregates in
Nigeria.
·
To see
whether or not, the transmission mechanism of the monetary policy in Nigeria
changed within the period of study.
·
To establish
empirically, whether or not, monetary aggregates have useful information for
forecasting inflation.
·
To examine
whether or not, the development of financial sector has any significant effect
on economic growth.
1.3 Significance of the Study
A lack
of understanding of the factors influencing the variables in the money supply
determination could lead to so many problems in an economy. More so, the
process of money supply on the Less Developed Countries (LDCs) is largely due
to the level of development of the institutional and organizational structure
of financial sector and to some extent the lack of adequate bases for policy by
the authorities. These developed institutional and organisational structures
can aid and induce the bases for efficient policy. The prevalence of adequate
bases for policy would guide policy-makers on how to improve the system. (see Fakiyesi,
1999, pp. 2 ).
In fact,
the quantity of money at any point in time is one of the major variables that
affects and determine the level of aggregate economic activity in a nation.
Thus, if the factors determining money supply is known and if it is stable,
then the economy could be armed with a powerful tools “money supply” with which
the monetary authorities can effectively utilize in coordinating, organizing,
managing and promoting economic growth. More so, effective monetary policies
will help the economy in achieving her target of being the hob of African in
terms of financial management and streamlined the economy towards actualizing
her vision 2020 dream.
1.4 The
Scope of the Study
Though
the study seeks to explain and model money supply determination in Nigeria, the
empirical investigation is limited to data obtained from 1983 to 2008. This is
to make for a critical and appropriate analysis of money supply in Nigeria. Annual
data covering the period between 1983 and 2008 was obtained on the variables
for relevant analysis. The choice of 1983 as the base year is influence by the
military intervention in that year followed by the deregulation of financial
sector in 1986. This thesis addresses three related issues linked different
aspects of financial sector and monetary aggregate controls.
The
component of monetary aggregate (M2) are addressed. This is followed
by an evaluation of the information content in the different variable
influencing or determining money supply in Nigeria. The remaining aspect,
highlight the variables for forecasting and predicting inflation in Nigeria. Thus,
we shall try as much as possible to analyze factors that affect money supply
determination in the Nigeria context, as well as taking a look at the most
current important issues and questions in the Nigerian money supply
determination
1.5 Research
Questions
The
following questions are germane to the issues being investigated in the study.
·
Was the
balance sheet of the central bank and the commercial banks accurate within the
period of study?
·
Were the assets and liabilities of
financial institutions consolidated within the period of the study?
·
Do aggregate domestic credits have any
significant impact on money supply?
·
What are the causal links between
foreign assets and monetary aggregates
·
Do monetary aggregates have any useful
information for forecasting inflation in Nigeria?
·
Does the development of financial system
have any significant impact on economic growth?
The following
questions are transformed into the following null hypotheses.
1.6 Hypotheses
·
The balance sheet of the central bank and the commercial banks was not
accurate within the period of study.
·
The assets
and liabilities of the financial institutions were not consolidated within the
period of study.
·
The aggregate
domestic credits have no significant impact on money supply.
·
There are no
causal links between the foreign assets and monetary aggregates.
·
Monetary
aggregates have no useful information for forecasting inflation in Nigeria.
·
The financial
sector development does not have any significant impact on economic growth.
1.7 Method of Data Collection
The data that will be
used in this work is secondary data obtained from CBN statistical bulletin,
financial reviews, international official statistics year book, annual
abstracts of statistics and the Nigeria’s principal economic and financial
indicators.
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