What are the determinants of money supply in Nigeria? (2024)

What are the determinants of money supply in Nigeria?

Data used for the study were collected from the 2019 CBN Annual Statistical Bulletin. The study found that financial liberalization is an important factor in determining money supply in Nigeria, in addition to currency ratio, required reserve ratio and high-powered money.

What are the determinants of money and supply?

There are two theories of the determination of the money supply. According to the first view, the money supply is exogenously by the central bank. The second view holds that the money supply is determined endogenously by changes in the economic activity which affect people's desire to deposits the rate of interest etc.

What is the money supply of Nigeria?

Nigeria's broad money supply increased to N78. 74 trillion as of December 2023, the highest ever recorded in the country. This is an increase of N26. 58 trillion or 51% year on year when compared to N52.

What are the determinants of inflation in Nigeria?

The study identified a combination of structural and monetary factors including real output, nominal exchange rate, broad money supply, nominal interest rate and fiscal deficit, as determinants of inflation. They however, stated that output growth has the strongest impact on inflation.

What are the determinants of economic growth in Nigeria?

Results indicate that the main determinants of economic growth in Nigeria are population growth, inflation, foreign direct investment (FDI), interest rates, exports as well as private & public investment.

What are the determinants of economic development in Nigeria?

The results suggested that a unit increase in the level of, control of corruption, investment, and total government expenditure dampens economic development by 26.3%, 8.08%, and 2.2% respectively in the long run, while a unit increase in voice and accountability, and income from natural resources enhance economic ...

What is the most important determinant of the money supply?

Federal Reserve policy is the most important determinant of the money supply. The Federal Reserve affects the money supply by affecting its most important component, bank deposits.

What are the 4 determinants of supply?

Determinants of supply definition refer to factors that influence the supply of certain goods and services. These factors include the price of inputs, the company's technology, future expectations, and the number of sellers. Determinants of supply are factors that directly affect the supply of a good or service.

What are the determinants of money supply in developing countries?

Previous studies on the determinants of money supply centred largely around high-powered money and money multiplier (Lodha & Lodha, 2012; Lone & Yadav, 2016; Odior, 2013), reserve money, bank rate, and currency ratio (Tiwari, 2016; Shrestha, 2013; Muhammad & Islam, 2010), income or GDP and interest rate (Ifionu & ...

What is the money problem in Nigeria?

Nigeria, Africa's largest economy, is facing an economic crisis. From a botched currency redesign to the removal of fuel subsidies and a currency float, the nation has been plunged into spiralling inflation and a currency crisis with far-reaching consequences.

What is the effect of money supply on economic growth in Nigeria?

Broad money supply indicates positivity, yet weak significant to determine the economic growth in Nigeria. However, credit to the private sector is inversely and statistically significant to determine the economic growth in Nigeria. Inflation rate and interest rate both have inverse effect.

How does money supply affect inflation in Nigeria?

With 1 percent increase in money supply, inflation will increase by 152 percent. Also, with a 1 percent change in exchange rate and interest rate; inflation got reduced by 207 and 139 percents respectively. From this, it can be inferred that money supply, exchange rate and interest rate determine inflation in Nigeria.

Why does Nigeria have high inflation?

The weaker naira , which suffered a second devaluation in less than a year last month, is a key factor behind price pressures alongside energy and logistics costs associated with infrastructure problems. The food and non-alcoholic beverages category was the biggest driver of inflation in January in annual terms.

Why does Nigeria have the highest inflation rate?

Inflation in the West African nation — where at least 40% of its population of more than 200 million live in extreme poverty — surged after looser foreign-exchange restrictions in June led the naira to almost halve in value by the end of 2023.

Is Nigeria currently facing inflation?

Now, Nigerians have to grapple with unprecedented inflation too. Nigeria's inflation rate rose to 29.90% in January 2024, from 28.92% in December 2023. This is the highest it has been in two decades. Global inflation has reached historic levels during the past three years.

What is affecting the economy of Nigeria?

Nigeria's economic potential is constrained by many structural issues, including inadequate infrastructure, tariff and non-tariff barriers to trade, obstacles to investment, lack of confidence in currency valuation, and limited foreign exchange capacity.

What are the economic factors affecting businesses in Nigeria?

In the World Bank Enterprise survey of 2,676 firms in Nigeria, access to finance (33.1%), access to electricity (27.2%) and the level of corruption (12.7%) were the most ranked obstacles for business owners.

What are the economic determinants of economic development?

The major determinants of economic growth are investment in infrastructure, research and development, education, and healthcare; technological advancements; and human capital. The major determinants of economic growth are import and export balance, country's GDP, and inflation rate.

What are the determinant of government expenditure in Nigeria?

The result of ARDL showed that inflation and population have a long-run relationship with total government expenditure in Nigeria. The findings also, revealed that national income and trade openness are statistically insignificant in influencing the total government expenditure in Nigeria.

What are the economic determinants of economic growth?

Increases in capital goods, labor force, technology, and human capital can all contribute to economic growth. Economic growth is commonly measured in terms of the increase in aggregated market value of additional goods and services produced, using estimates such as GDP.

What are the determinants of high powered money and money supply?

In other words, the money supply is determined by the high powered money (H) and the money multiplier (M). The size of money multiplier is determined by the currency ratio (Cr) of the public, the required reserve ratio(RRr) of the central bank and the excess reserve ratio(ERr) of commercial banks.

What are 3 major measures of the money supply?

What are the determinants of money demand?

Among the most important variables that can shift the demand for money are the level of income and real GDP, the price level, expectations, transfer costs, and preferences.

What are the five 5 determinants of supply?

What are the 5 determinants of supply?

Some of the determinants of supply are technology, the number of suppliers, expectation of suppliers, feedback from consumers, increase in tax, high wage rate, etc. The change in prices of other products which a producer can produce may cause a change in supply for the product.