An empirical analysis of the effect of monetary policy on the manufacturing sector in Nigeria

Authors

M. Ali, Usman Danfodio University, Sokoto, Nigeria
H. Aliero, Usman Danfodio University, Sokoto, Nigeria
M. Abubakar, Usman Danfodio University, Sokoto, Nigeria

Publisher

Central Bank of Nigeria

Keywords

Monetary policy, Manufacturing sector, Nigeria

Abstract

This study examined the effect of monetary policy on the manufacturing sector in Nigeria from 1970 to 2012 using Autoregressive Distributed Lag (ARDL) bound testing approach. Exchange rate was found as the only channel of monetary policy transmission with significantly negative effect on the manufacturing sector. This implies that manufacturing firms largely rely on foreign inputs for production and do not depend on the banking system for funding. The study, therefore, recommends indigenous technology and financial system development to reduce dependence on imported inputs and facilitate access to more funds.

Author Bio

Muhammad Ali is a Research Associate at Econometrica Consultants Limited, Ibrahim H. Aliero (PhD) and Mika’ilu Abubakar (PhD) are Senior Lecturers at the Department of Economics, Faculty of Social Sciences, Usman Danfodiyo University, Sokoto.

Publication Title

CBN Economic and Financial Review

Issue

2

Volume

53

Recommended Citation

Ali, M., Aliero, H., and Abubakar, M. (2015). An empirical analysis of the effect of monetary policy on the manufacturing sector in Nigeria. CBN Economic and Financial Review, 53(2), 19-46.