Economic and Financial Review


Central Bank of Nigeria


Open Market Operations, OMO, Nigeria


This article attempts to investigate the effectiveness of the open market operations in Nigeria adopting an error correction methodology. The study showed that in the conduct of defensive open market operations, inflationary expectations, treasury bill rate, income and fiscal balances exert significant influences on the volume of bank reserves. The persistent effect of fiscal balances on the volume of bank reverses in the short run shows that consideration of government activities remains important in developments in the financial sector. Findings from the study revealed that the system adjusts itself to equilibrium within three quarters in the event of a shock. The finding that sales of government securities in the secondary market do not exert effect in the long-run conforms to the Keynesian postulations that monetary policy becomes less effective in the long-run.

Author Bio

Phebian. N. Omanukwue and Magnus. O. Abeng are staff of the Research Department of the Central Bank of Nigeria.

Publication Title

CBN Economic and Financial Review





Recommended Citation

Omanukwue, P. N. & Abeng, M. O. (2008). An empirical investigation on the effectiveness of Open Market Operations (OMO) in Nigeria. CBN Economic and Financial Review, 46(1), 33-68.

Included in

Economics Commons



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