Monetary Policies and the Achievement of Bank Profit Objective

Abstract This study examined the nexus between monetary policy and the achievement of a bank’s profit objective. There have been lots of arguments about the benefits of monetary policy implementation on deposit money bank’s operations, since the policies have been seen to impact on their performance. This study was carried out to establish the influence of variables like Liquidity Ratio, Interest and Money supply (M2), which are used as monetary policy instruments, on deposit money bank profitability objective. The study covers the period from 2002-2019. The Auto Regressive Distributed Lag and Error correction model were adopted in the analysis of the data. The study revealed that there was a positive long run relationship between Liquidity Ratio and deposit money bank’s profitability; there also existed a negative long run relationship between interest rate and deposit money bank profitability; lastly, there existed a positive long run relationship between Money Supply (M2) and deposit money bank’s profitability. Based on the findings, monetary authorities should put in place measures for Liquidity ratio, interest rates and M2 implementation to aid deposit money banks operations in the achievement of their profit objective.

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Monetary Policy and Nigeria's Trade Balance, 1980-2018

Signifikan Jurnal Ilmu Ekonomi ◽

10.15408/sjie.v10i1.18132 ◽

2021 ◽

Vol 10 (1) ◽

pp. 129-138

Author(s):

Musa Abdullahi Sakanko ◽

Kanang Amos Akims

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Interest Rates ◽

Trade Balance ◽

Time Series Data ◽

Policy Instruments ◽

Flexible Exchange Rate ◽

Series Data ◽

Distributed Lag ◽

Long Run

Several countries have integrated monetary easement into their foreign policy to faucet the gains from trade thereby, assuring that market forces determine monetary policy instruments such as interest rate and exchange rate. It is on this note and this paper empirically evaluate the effect of monetary policy on Nigeria's trade balance using the Autoregressive Distributed Lag Model on the time series data spanning from 1980 to 2018. The findings reveal that monetary policy tools of real interest and effective exchange rate have a long-run co-integration relationship and significant adverse effects on Nigeria's trade balance both in the short-run and long-run. Thus, the paper concludes that monetary policy is a veritable tool through which Nigeria can maintain a favorable trade balance. Therefore, policymakers should step on measures that will maintain low-interest rates to sustain a flexible exchange rate and remove all rigidities associated with the international payment system.JEL Classification: C22, E52, F13How to Cite:Sakanko, M. A., & Akims, K. A. (2021). Monetary Policy and Nigeria’s Trade Balance, 1980-2018. Signifikan: Jurnal Ilmu Ekonomi, 10(1), 129-138. https://doi.org/10.15408/sjie.v10i1.18132.

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An Empirical Study on Monetary Policy and Economic Growth: The case of Indonesia using an ARDL – ECM Approach

Psychology and Education Journal ◽

10.17762/pae.v58i1.2004 ◽

2021 ◽

Vol 58 (1) ◽

pp. 5908-5922

Author(s):

Samoon Safiullah Et al.

Keyword(s):

Economic Growth ◽

Monetary Policy ◽

Money Supply ◽

Unit Root Test ◽

Policy Instruments ◽

Distributed Lag ◽

Integration Approach ◽

Stationary Analysis ◽

Long Run ◽

Augmented Dickey Fuller

This study explores the role of monetary policy instruments, particularly through the board money supply and inflation, in support of economic growth in Indonesia. The research base on the long-run co-integration approach using the data from 1970 to 2019. The goal of this study complies with applying the Autoregressive Distributed Lag (ARDL), and Error Correction Model (ECM), for finding out the long-run co-integration approach among dependents and independent variables. The research includes the Augmented Dickey-Fuller (ADF) unit root test for stationary analysis. The ECM results show that inflation plays a significant but negative role in economic growth in Indonesia. On the other hand, the money supply has also inversely related to the country's economic growth but not significant

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An econometric analysis of the effectiveness of fiscal and monetary policies in India

10.31219/osf.io/39s7a ◽

2021 ◽

Author(s):

Anand Nadar

Keyword(s):

Economic Growth ◽

Monetary Policy ◽

Fiscal Policy ◽

Money Supply ◽

Series Data ◽

Monetary Policies ◽

Indian Economy ◽

Long Run ◽

Short Run ◽

Bound Test

This study investigatesthe effectiveness of fiscal policy and monetary policy in India. We collected thetime series data for India ranging from 1960 to 2019 from World Development Indicator (WDI). Weapplied the bound test co-integration approach to check the long-run relationship between fiscalpolicy, monetary policy, and economic growth in the context of Indian economy. The short-run andlong-run effects of fiscal policy and monetary policy have been estimated using ARDL models. Theresults showed that there is a long-run relationship between fiscal and monetary policies witheconomic growth. The estimated short-run coefficients indicated that a few immediate short runimpacts of fiscal and monetary policies are insignificant. However, the short-run impacts becomesignificant as time passes. The long-run results suggested that the long-run impact of both fiscal andmonetary policies on economic growth are positive and significant. More specifically, the GDP levelincreases if the money supply and government expenditure increase (Expansionary fiscal andmonetary policies). On the other hand, the GDP level decreasesif the money supply and governmentexpenditure decrease (contractionary fiscal and monetary policies). Therefore, this studyrecommends to use expansionary policies to spur the Indian economy.

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Cyclical Fluctuation, Growth, and Stabilization: An Empirical Investigation of Dual Policy Objectives in Bangladesh

10.31219/osf.io/45fwz ◽

2020 ◽

Author(s):

Richmond Sam Quarm ◽

Mohamed Osman Elamin Busharads

Keyword(s):

Monetary Policy ◽

Fiscal Policy ◽

Business Cycle ◽

Interest Rates ◽

Money Supply ◽

Macroeconomic Policy ◽

Output Growth ◽

Long Run ◽

Short Run ◽

The Business Cycle

In conventional economics, two types of macroeconomic policy i.e. fiscal policy and monetary policy are used to streamline the business cycle. This paper has examined the cyclical behavior of these variables over the business cycle of Bangladesh. The objective of this examination is to show whether policies (fiscal policy and monetary policy) in Bangladesh are taken with a motive to stabilize the economy or only to promote economic growth. In other words, it has examined whether the policies in Bangladesh are procyclical or countercyclical or acyclical. Hodrick Prescott (HP) filter has been used to separate the cyclical component of considered variables. Both correlation and regression-based analysis have provided that in Bangladesh government expenditure and interest rates behave procyclically, but money supply behaves acyclically over the business cycle. Besides, this paper has tried to identify the long-term as well as the short-term relationship between real GDP and the macroeconomic policy variables with the help of the Johansen cointegration test, vector error correction model (VECM), and block exogeneity Wald test. Through these analyses, this study has found that fiscal policy has a significant impact on GDP growth both in the short-run and long-run. In the case of monetary policy, although the interest rate has an impact on real output both in the short-run and long-run, the money supply has neither a short-run nor long-run effect on output growth.

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MEMORY RESPONSE OF CAPITAL MARKET PERFORMANCE TO INTEREST RATES ANNOUNCEMENT: ATHEORETICAL EVIDENCE IN NIGERIA

International Journal of Advanced Research ◽

10.21474/ijar01/13620 ◽

2021 ◽

Vol 9 (10) ◽

pp. 857-866

Author(s):

Suoye Igoni ◽

◽

Peter Onigah ◽

Valentine Ike Olisekebe ◽

◽

...

Keyword(s):

Monetary Policy ◽

Interest Rates ◽

Capital Market ◽

Market Performance ◽

Market Capitalization ◽

Memory Response ◽

Distributed Lag ◽

Market Rate ◽

Long Run ◽

The Capital Market

Despite the management of interest rates by the monetary policy authorities over these years, the performance of the capital market has not been impressive in Nigeria. The study analyzed the memory response of the capital market performance to interest rates announcement in Nigeria. The study used monetary policy rate, and deposit market rate as against market capitalization. The study sourced data from the Central Bank of Nigeria Statistical Bulletin between 1985 and 2020. The study adopted the Augmented Dickey-Fuller, and the Autoregressive Distributed Lag for the analysis. The findings showed that, deposit money rate was stationery at levels, while monetary policy rate, and market capitalization were at first differences, and no long run co-integrating equation. The theoretical evidence from the Error correction test findings revealed that, interest rates announcement did not constitute significant variables on the memory of the Nigerian capital market performance. Regular monitory and downward review of interest rates by the Nigerian monetary policy committee were recommended.

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IMPACT OF MONETARY POLICY TARGETS ON CAPITAL MARKET DEVELOPMENT IN NIGERIA

International Journal of Innovative Research in Education, Technology & Social Strategies ◽

10.48028/iiprds/ijiretss.v8.i1.09 ◽

2021 ◽

Vol 8 (1) ◽

pp. 85-95

Author(s):

Abdulkarim Musa ◽

◽

Uwaleke Uche ◽

Nwala Nneka ◽

◽

...

Keyword(s):

Monetary Policy ◽

Money Supply ◽

Capital Market ◽

Time Series Data ◽

Market Development ◽

Series Data ◽

Distributed Lag ◽

Long Run ◽

Short Run ◽

The Impact

This study empirically examines the impact of monetary policy targetson capital market development in Nigeria from 1986-2018. Time series data and econometric tools were used to test for the stationarity and causality effect. The Auto-Regressive Distributed Lag Model (ARDL) and Error Correction Model (ECM) techniques were used to examine the short-run and long-run impact and relationship between Monetary Policy and Capital Market Development in Nigeria. The study revealed that both in the long run and short run Exchange Rate (EXCHR), Inflation Rate (INFR), and Interest Rate in Nigeria (INTR)were negatively related to Capital Market Development (CAMKTD) in Nigeria and they were statistically insignificant in explaining changes in Capital Market Development (CAMKTD) in Nigeria. On the other hand, inthe long run, Money Supply was positively related to Capital Market Development (CAMKTD) in Nigeria and was statistically significant at a 5% level significant while Money Supply (M2) was positively related to Capital Market Development (CAMKTD) in Nigeria both in the long run and short-run and was statistically significant at 5% level of significance. Therefore, the study recommends that government should improve the efficiency and effectiveness of the money supply in Nigeria since it was statistically significant in determining the improvement of Capital Market Development (CAMKTD) in Nigeria.

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Does Nominal Devaluation Improve Income Distribution? Evidence from Bangladesh

South Asian Survey ◽

10.1177/0971523114539586 ◽

2012 ◽

Vol 19 (1) ◽

pp. 61-77

Author(s):

Muhammad Shahbaz ◽

Mohammad Mafizur Rahman

Keyword(s):

Income Inequality ◽

Income Distribution ◽

Trade Openness ◽

Bounds Testing ◽

Correction Model ◽

Distributed Lag ◽

Long Run ◽

Short Run ◽

Auto Regressive ◽

The Impact

The article aims to investigate the impact of nominal devaluation on income distribution in Bangladesh both in short and long runs. In doing so, Auto Regressive Distributed Lag (ARDL) bounds testing has been employed for cointegration, and Error Correction Model (ECM) has been used for short-run dynamics. The empirical psychology has confirmed the existence of long-run relationship between the variables. Furthermore our estimated results reveal that nominal devaluation tends to decrease income inequality. Though economic growth appears to improve income distribution, non-linear link between both the variables, however, depicts Kuznets’ inverted-U curve (1955). Financial development causes further deterioration in income distribution. Trade openness contributes to income inequality as discussed in Leontief Paradox.

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THE RELATIONSHIP BETWEEN MONETARY POLICY AND PRIVATE SECTOR CREDIT IN SADC COUNTRIES

Eurasian Journal of Economics and Finance ◽

10.15604/ejef.2021.09.01.004 ◽

2021 ◽

Vol 9 (1) ◽

pp. 46-54

Author(s):

Vikela Liso Sithole ◽

◽

Tembeka Ndlwana ◽

Kin Sibanda ◽

◽

...

Keyword(s):

Monetary Policy ◽

Gross Domestic Product ◽

Private Sector ◽

Money Supply ◽

Sustainable Growth ◽

Domestic Product ◽

Distributed Lag ◽

Long Run ◽

The Impact ◽

The Relationship

This paper empirically examined the relationship between monetary policy and private sector credit in the Southern African Development Community (SADC) group of countries using a panel autoregressive distributed lag (ARDL) co-integration technique for the period from 2009 to 2018. The Hausman test result indicated that the null hypothesis of long-run homogeneity cannot be rejected and hence we accept the pooled mean group estimators (PMGE) as a consistent and efficient estimator. The PMGE results showed that credit to the private sector and gross domestic product have a positive and statistically significant long-run impact on money supply. The impact of credit to the private sector on money supply is shown by the results to be statistically significant and positive both in the short and long run. The impact of gross domestic product on money supply was found to be statistically significant positive in the long run while positive but insignificant in the short run. The study recommends policy attention that is directed towards the appetite for accelerated growth, investment, and employment in the SADC region but more importantly with more regard to the establishment of sustained macroeconomic stability as a precondition to sustainable growth and for the creation of monetary union in the region.

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The Manufacturing Sector Impact of Monetary Policy Frameworks: Evidence from Nigeria

Financial Markets Institutions and Risks ◽

10.21272/fmir.5(3).14-22.2021 ◽

2021 ◽

Vol 5 (3) ◽

Author(s):

Oludayo Elijah Adekunle

Keyword(s):

Monetary Policy ◽

Money Supply ◽

Manufacturing Sector ◽

Data Series ◽

Macroeconomic Policies ◽

Distributed Lag ◽

Long Run ◽

Policy Frameworks ◽

Short Run ◽

Reserve Ratio

Monetary policy as macroeconomic tool is germane to maintain economic balances and stimulate sectoral growth. However, the channels through monetary policy influenced manufacturing sector has not been adequately explored in Nigeria. Therefore, this study was carried out to uncover the linkage between monetary policy channels and manufacturing sector output in Nigeria within the period of 1986 to 2018. The unit root result based on Augmented Dickey-Fuller and Phillips-Peron tests showed the data series are integration of level and first difference. Data were analyzed with Autoregressive Distributed Lag-Bound Co-integration dynamic technique. It was discovered from the study that, monetary policy channels determines manufacturing sector output in the long run. It was further established that, manufacturing sector output responded positively and significantly to momentary policy rate, broad money supply and inflation rate while cash reserve ratio and exchange rate had negative and insignificant relationship with manufacturing sector output in the long run coefficients with mixed effects in the short run coefficients. These results suggest that, monetary policy channels are powerful tool for influencing manufacturing sector output and promoting sectroal growth especially in the long run. Thus, it was suggested that the current monetary policy frameworks should be maintained and sustained, while cash reserve ratio of banks should be reviewed to support lending to the manufacturing sector. The growth of money supply should be adequately monitored and controlled in line with the structure of the economy. Finally, appropriate and stable macroeconomic policies should be initiated to ensure macroeconomic stability capable of supporting manufacturing sector activities.

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Do Interbank Interest Rates Matter for Stock Prices at Nepal Stock Exchange?

Pravaha ◽

10.3126/pravaha.v26i1.41870 ◽

2020 ◽

Vol 26 (1) ◽

pp. 165-170

Author(s):

Rajesh Gurung

Keyword(s):

Interest Rate ◽

Interest Rates ◽

Stock Prices ◽

Stock Price ◽

Stock Exchange ◽

Distributed Lag ◽

Long Run ◽

Auto Regressive ◽

The Interest Rate ◽

Bound Test

This study examines an auto-regressive distributed lag (ADRL) modeling approach to develop the relationship between the stock price and interest rate in the context of Nepal, using the monthly data for the period from July 1996 to January 2019. NEPSE Index in Nepal Stock Exchange Limited is used for the stock prices and interbank interest rate released in Quarterly Economic Bulletin of Nepal Rastra Bank is used for the interest rate. The bound test for co-integration and estimated negative coefficient of long-run regression results justified by the Error Correction Mechanisms (ECM) establishes a valid negative long-run association between the INTEREST and PRICE. This suggests important considerations for policies towards an interest rate stabilization for the stock price stability and further development of the stock market in Nepal.

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