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Re-examining Monetary Policy Effects and Sectoral Real Sector in Nigeria

Oladimeji, Ebenezer O. and Bowale, Ebenezer I.K and Okodua, Henry (2022) Re-examining Monetary Policy Effects and Sectoral Real Sector in Nigeria. Journal of African Research in Business & Technology, 2022. ISSN 2165-9443

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The debate about overreliance on oil and its non-sustainability to resolve major economic problems in Nigeria has shifted more attention to the real sector of the Nigerian economy. Over a few years ago, the government and the monetary authority have refocused their economic and policy decisions to include the growth of the sector. In achieving this, the government has, among its policy approaches, used the monetary policy instrument to improve the sector and addressed some of the problems that have bedeviled the sector over the past years. This study reexamined the channel through which monetary policy affects each sector of the real economy, using the structural vector autoregression (SVAR). Seasonally adjusted quarterly data between the period of 2008Q1 and 2018Q4 were used for the study. The results revealed that credit and asset price channels are the most dominant monetary policy transmission channels to the sectoral real sector. However, the intervening role of credit risk in the effectiveness of monetary policy to the real sector was established, as it reordered the percentage response of sectoral outputs to shocks from the variables that represent channels of monetary policy transmission to the real sector. This study, therefore, recommends that the monetary authority should always consider credit risk, while taking real sector targeted policy decisions in order to predictably forecast the expected results of its policy actions; so as to improve real sector performance.

Item Type: Article
Uncontrolled Keywords: Real Sector, Monetary Policy, Credit Risk, Structural Vector Autoregression (SVAR)
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: nwokealisi
Date Deposited: 27 Feb 2023 14:54
Last Modified: 27 Feb 2023 14:54

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