Central Bank of Nigeria, Liquidity, Sectoral credit allocation
This article describes the ways in which the CBN has supplied liquidity since 2009. The first is traditional: The CBN supplies liquidity by providing credit through Open Market Operations (OMO) and by lending to depository institutions at the so-called discount window. The second is by enhancing the liquidity of the banks through the Standing Lending Facility (SLF) window. The article notes that the CBN since after banking consolidation exercise in 2005 has departed from its long standing tradition of minimizing its effect on the allocation of credit by supplying liquidity to institutions that it believed to be most in need; at the same time; it neutralized the effects of these actions on the total supply of liquidity in the financial market. This article also discusses the CBN's reasons for reallocating credit to the sector that will most impact the real sector of the economy for growth and employment this time rather than simply increasing the total supply of financial market liquidity. This is because monetary policies have price effects and their output effect cannot be established in a direct firm manner if CBN do not reach out with credit allocation to the sectors that give fillip to growth. The article is divided into 5 sections: Section 1 being the introduction, while section 2 discusses “What is Liquidity” concept and definitions. Section 3 will look at the CBN as a supplier of market liquidity and how CBN has allocated credit to the sectors that impact on the real sector. Section 4 will compare the conventional monetary policy versus unconventional monetary policy while section 5 concludes the article.
Akanji, Omolara O.
"The Central Bank of Nigeria, the liquidity and the sectoral credit allocation,"
Bullion: Vol. 34:
1, Article 1.
Available at: https://dc.cbn.gov.ng/bullion/vol34/iss1/1