Monetary Policy and Banking Sector Stability in Nigeria

Authors

Didigu Chizoba E., Central Bank of NigeriaFollow
Joshua Nsikak J., Central Bank of Nigeria
Okon Joel I., Central Bank of Nigeria
Eze Annette O., Central Bank of Nigeria
Gopar Jurbe Y., Central Bank of Nigeria
Oraemesi Charles N., Central Bank of Nigeria
Udofia Blessing-Oxford U., Central Bank of Nigeria
Yisa Daniel N., Central Bank of Nigeria
Ejinkonye Jude C., Central Bank of Nigeria
Ette Victoria E., Central Bank of Nigeria

Keywords

Banking sector stability, financial system, monetary policy

Abstract

This study investigates the impact of monetary policy on banking sector stability in Nigeria, utilizing quarterly data for the period 2007Q1 to 2021Q4. The study employs the autoregressive distributed lag (ARDL) bounds testing approach to cointegration. Results show that a long run relationship exist between banking sector stability and monetary policy in Nigeria. Furthermore, monetary policy rate, liquidity ratio, and cash reserve ratio are found to enhance banking sector stability. The study recommends, among others, that cash reserve and liquidity ratios should be kept at levels that will prevent excess liquidity in the system.

Author Bio

The authors are staff of the Central Bank of Nigeria.

Publication Title

CBN Journal of Applied Statistics

Issue

No. 1

Volume

Vol. 13

First Page

1

Last Page

26

Recommended Citation

Chizoba E., Didigu; Nsikak J., Joshua; Joel I., Okon; Annette O., Eze; Jurbe Y., Gopar; Charles N., Oraemesi; Blessing-Oxford U., Udofia; Daniel N., Yisa; Jude C., Ejinkonye; and Victoria E., Ette (2022) "Monetary Policy and Banking Sector Stability in Nigeria," CBN Journal of Applied Statistics (JAS): Vol. 13: No. 1, Article 4.
Available at: https://dc.cbn.gov.ng/jas/vol13/iss1/4