Economic and Financial Review


Central Bank of Nigeria


Monetary policy, Banking system stability, Nigeria


The paper examined the effect of monetary policy on banking system stability in Nigeria. The main objective was to evaluate how monetary policy affected the banking system stability during the global financial crisis in Nigeria. Static and dynamic error correction models were estimated using monthly data from January 2007 to June 2013 and the error correction model was found most efficient. The banking system stability index was computed using banking soundness index, banking vulnerability index and economic climate index. The results showed that increase in monetary policy rate, depreciation of nominal exchange rate and rising inflation rate negatively affected the banking system stability.

Author Bio

The authors are staff of the Monetary Policy Department.

Publication Title

CBN Economic and Financial Review





Recommended Citation

Bamidele, A., Musa, J., Bala-Keffi, L., Owolabi, O., Imam, S. (2005). Effects of monetary policy on the banking system stability in Nigeria, CBN Economic and Financial Review, 53(2), 1-18.

Included in

Economics Commons



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