Monetary Policy and Industrial Growth in Nigeria

Abstract

The study empirically analyze monetary policy and industrial growth in Nigeria with data spanning from 1996-2019. The Statistical Bulletin of the Central Bank of Nigeria (CBN) and World Development Indicators were used to compile the data. Descriptive statistics, Augmented Dickey Fuller (ADF) test, Granger causality, and Ordinary Least Square (OLS) were analytical tool used to test the hypotheses. E-Views 9.0 is used as the statistical tool for this study and Log of Industry Sector Gross domestic product (LogINGDP) as the dependent variable, Lending Rate (LR), Deposit interest rate (DPIR) and Money Supply annual growth Rate (M₂) as the independent/explanatory variables. The study concludes that lending rate (LR), deposit interest rate (DPIR) and money supply growth rate (M₂) as proxies for monetary policy have significant impact on industrial growth of developing countries, Nigeria in particular. That is, monetary policy is an effective means of improving industry growth as well as growth of the economy. The study recommends that Federal Government should review its monetary policies through the Central Bank on its instruments to boost industry sector growth of Nigeria.