An assessment of central banking on unemployment and poverty: The case of Nigeria
DOI:
https://doi.org/10.31580/jmi.v9i1.2486Keywords:
Central Banking, Monetary Policy, Poverty, UnemploymentAbstract
This paper assesses the impact of Central Bank monetary policies on living standards in Nigeria from 1980 to 2017, using eclectic regression techniques. The outcome reveals that unemployment growth is positively sensitive to policy rates and money supply. Per capita income is negatively sensitive to police rate, which suggests that policies do not address structural weaknesses that influence rapid price variations. The study thus fails to reject the hypothesis that Central Banking policies may be accentuating unemployment and poverty in Nigeria. The paper recommends low policy rate possibly at the middle of single digit; an indexed-wage system; and stoppage of money supply through ways and means.
References
Adegboye, A. A. & Alimi, R. S. (2017). Public–Private Investment Nexus in Developing Economies: Does Financial Sector Development Matter for Nigeria? MPRA, retrieved from Online at https://mpra.ub.uni-muenchen.de/80908/, cited Jan. 02, 2020, 1-16.
Agyemang-Badu, A. A., Agyei, K., & Duah, K. E. (2018). Financial Inclusion, Poverty and Income Inequality: Evidence from Africa. Spiritan International Journal of Poverty Studies, 2(2), 1-20
Ames, B., Brown, W., Devarajan, S., & Izquierdo, A. (2001). Macroeconomic Policy and Poverty Reduction. Draft for Comments. April., IMF and The World Bank.
Acemoglu, D. & Robinson, J. (2008) The Role of Institutions in Growth and Development. The International Bank for Reconstruction and Development/ The World Bank, WP.10,1-44
Asteriou, D. & Hall, G. S. (2011). Applied Econometrics, 2nd Edition, Palgrave Macmillan, 319-333
Beck, T., Demirgue-Kunt, A., & Levine, R. (2004). Financial, Inequality, and Poverty: Cross-Country Evidence. NBER Working paper 10979. National Bureau of Economic Research, Cambridge, MA.
Bhorat, H., Naidoo, K., & Pillay, K. (2016). Growth, Poverty and Inequality Interactions in Africa: An Overview of Key Issues. United Nations Development Programme Regional Bureau for Africa (RBA). Inequality Project. UNDP-RBA/WPS 1/2016. Retrieved from https://ageconsearch.umn.edu › record › files ›, cited Oct. 17, 2021.
Brooking Institute (2018). The start of a new poverty narrative. Retrieved from https://www.brookings.edu/blog/future-development/2018/06/19/the-start-of-a-new-poverty-narrative/ cited Nov. 10, 2020
CBN (2018). 2018 Statistical Bulleting- Financial sector. Central Bank of Nigeria (CBN), Abuja, Nigeria. www.cbn.org
CBN (2016). Education in Economic Series No 3. Interest rate. Central Bank of Nigeria, Research Department, 3-4
DFID (2004). The importance of financial sector development for growth and poverty reduction. Policy Division Working Paper, issued by the Policy Division, Department for International Development, DFID, 1 Palace Street London, UK
Dingela, S. & Khobai, H. (2017). Dynamic impact of Money Supply on Economic Growth in South Africa. An ARDL Approach. Online at https://mpra.ub.uni-muenchen.de/82539/MPRA Paper No. 82539, accessed online Dec. 27, 2019, 1-19
Dornbusch, R., Fischer, S., & Startz, R. (2011). Macroeconomics. Eleventh edition. International edition. McGraw-Hill, 22-50; 219-282
Eagle, F. R. & Granger, W. J. C. (1987). Co-integration and error correction: representation, estimation and testing. Econometrica, 55, 251-276
Eke, P. O. (2017). Interest Rate Macrostructure, Corporate Bond Market Development and Industrial Output in selected African Economies. A Ph.D Thesis. Available http://eprints.covenantuniversity.edu.ng/12955/1/Binder1.pdf.
Fenske, J. (2010). Institutions in African history and development: a review essay. Munich Personal RePEc Archive. Cited online at https://mpra.ub.uni-muenchen.de/23120/MPRA Paper No. 23120, accessed Jan. 25, 2019
Fowowe, B. (2017). Access to finance and firm performance: Evidence from African countries. Review of Development Finance 7, 6-17
Goldsmith, W. R. (1969). Financial structure and development, CT, Yale University Press, New Haven.
Goshit, G. G. & Longduut, G. T. (2016). Indirect Monetary Policy Instruments and Poverty Reduction in Nigeria: An Empirical Evidence from Time Series Data. International Journal of Academic Research in Business and Social Sciences, 6(4), 86-101
Greenwood, J. & Jovanovic, B. (1990). Financial development, Growth and the distribution of Income. The Journal of Political Economy, 98 (5), part 1, 1076-1107
Gurley, G. J. & Shaw, S. E. (1955). Financial aspects of economic development. The American Economic Review 4 (45), 515-538
Hauner, D. (2006). Fiscal Policy and Financial Development. IMF WP 06/26, 1-26
Heffernan, S. (2005). Modern Banking. John Wiley & Sons, Ltd, 30-32
Hussain, M. E. & Haque, M. (2017). Empirical Analysis of the Relationship between Money Supply and Per Capita GDP Growth Rate in Bangladesh. Journal of Advances in Economics and Finance, 2(1), February, 53-66
IMF (2015). Nigeria: Selected Issues. IMF Country Report No. 15/85. Retrieved from https://www.imf.org/external/pubs/ft/scr/2015/cr1585.pdf, cited Jan. 4, 2020
Jhingan, M. L. (2007). The Economics of Development and Planning, 39th edition. Vrinda Publications (P) Ltd: 292xvii-292xxxi, 31-38
Johansen, S. (1988). Statistical analysis of cointegration vectors. Journal of Economic Dynamics and control, 12(2-3), 231-254
Johansen, S. & Juselius, K. (1992). Testing structural hypothesis in a multivariate cointegration analysis of the PPP and the UIP for UK. Journal of Econometrics, Elsevier, 53 (1-3), 211-244
King, G. R. & Levine, R. (1993). Finance and growth: Schumpeter might be right. The Quarterly Journal of Economics, 108 (3), 717-737.
Kirkpatrick, C. (2000). Financial development, economic growth, and poverty reduction. The Pakistan Development Review, 39 (4) Part I (winter), 363–388
Knoop, A. T. (2013). Global Finance in Emerging Market Economies. Routledge International Studies in Money and Banking. Taylor and Francis Group. London and New York,118-135, 165-186
MacKinnon, J.G., Haug, A.A., & Michelis, L. (1999). Numerical distribution functions of likelihood ratio for cointegration. Journal of Applied Econometrics 14, 563-577
McKinnon, I. R. (1973). Money and capital in economic development. Brookings institution, Washington, D.C., United States.
Nallari, R. & Griffith, B. (2011). Understanding Growth and Poverty. Theory, Policy, and Empirics. Direction in Development. Poverty. The World Bank. Washington D.C. www.world bank.org, 99-111
Nissanke, M. (2017). Introduction: Tracing Poverty Dynamics in Sub-Saharan Africa: Recent Progress and Future Challenges, in Poverty Reduction in the course of African Development, Nissanke Machiko and Ndulo, Muna (eds). From Center for studies on African Economics (CSAE), Oxford University published to Oxford Scholarship Online www.oxfordscolaship.com, April 2017, accessed Jan. 2, 2020.
North, C. D. (1990). Institutions, Institutional Change, and Economic Performance. New York: Cambridge University Press
Nurkse, R. (1953). Problems of Capital Formation in Underdeveloped Countries. Oxford: Oxford University Press.
Nwosa, P. (2016). Impact of Macroeconomic Policies on Poverty and Unemployment Rates in Nigeria, Implications for Attaining Inclusive Growth. Acta Universitatis Danubius (AUDŒ) Œconomica), 12(2),114-126
Obasanjo, A. O. (2017). Obasanjo reveals what current interest rate will do to Nigeria’s economy. Daily Post, http://dailypost.ng/2017/09/29/obasanjo-reveals-current-interest-rate-will-nigerias-economy/, accessed Nov. 2, 2017.
Ogbeidi, M. M. (2012). Political Leadership and Corruption in Nigeria since 1960: A Socio-economic Analysis. Journal of Nigeria Studies, 1(2), 1-25
Ojo, T. A. (2010). The Nigerian Maladapted Financial System: Reforming Tasks and Development Dilemma in Nigeria. Chartered Institute of Banker Press, Nigeria, 154-174.
Olokoyo, F. O. (2006). Determinants of Banks’ lending Behaviour (A case study of Commercial Banks in Nigeria). M.Sc (Banking and Finance) unpublished dissertation, Covenant University, Ota, Nigeria
Patrick, T. H. (1966). Financial development and economic growth in underdeveloped countries. Economic Development and Cultural Change 14, 174-189.
Pressman, S. (2006). Fifty Major Economists, Second Edition. Routledge, Taylor & Francis Group. London and New York, 28-32
Pindyck, S. R. & Solimano, A. (1993). Economic Instability and Aggregate Investment. Massachusetts Institute of Technology and the World Bank, 260-303
Quartey, P., Turkson, E., Abor, J. Y., & Iddrisu, A. M. (2017). Financing the growth of SMEs in Africa: What are the contraints to SME financing within ECOWAS?. Review of Development Finance 7(1), 1-11
Ramsey, J. B. (1969). Tests for specification errors in classical least squares regression analysis. Journal of the Royal Statistical Society, Series B 31, 350-71.
Rewilak, J. (2017). The role of financial development in poverty reduction. Review of Development Studies 7(2), 169-176
Sanusi, O. J. (2002). Central Bank and the Macroeconomic Environment in Nigeria. Being a lecture delivered to participants of the Senior Executive Course No. 24 of the National Institute for Policy and Strategic Studies (NIPSS), Kuru on 19th August,1-19
Shaw, S. E. (1973). Financial deepening in economic development, New York. Oxford University Press, 19.
Sollis, R. (2012). Empirical Finance for finance and banking. First Edition. Wiley. A John Wiley & Sons Ltd Publication, 7-48
Stein, H. (2010). Financial liberalization, institutional transformation and credit allocation in developing countries: the World Bank and the internationalization of banking. Cambridge Journal of Economics, 34, 257-273
Stiglitz, E. J. (1998). Knowledge for Development: Economic Science, Economic Policy and Economic Advice. Address to the World Bank’s 10th Annual Conference on Development Economics, April.
Suri, T. & Jack, W. (2016). The long-run poverty and gender impacts of mobile money. Science, 354 (6317), 1288-1292
Taiwo, N. J., Falohun, T., & Agwu, M. E. (2016). SMEs financing and its Effects on Nigerian economic growth. European Journal of Business, Economics and Accountancy, 4(4), 37-54
Taylor, B. J. (1993). Discretion versus Policy rules in practice. Carnegie-Rochester Conference Series on Public Policy 39 North-Holland, 195-214
UNDP (2015). Work for Human Development. 25 Years of Human Development. Human Development Report 2015.
UNDP (2018). The 2018 Global Multidimensional Poverty Index (MPI). Retrieved from http://hdr.undp.org/en/2018-MPI, accessed Jan. 17, 2019
Verbeek, M. (2004). A Guide to Modern Econometrics, 2nd edition. John Wiley & Sons, Ltd, 309-385.
WEF (2017). The Inclusive Growth and Development Report 2017. World Economic Forum, Geneva, 1-75
World Bank (2013). Africa’s Pulse: An Analysis of Issues Shaping Africa’s Economic Future. World Bank, Washington, D.C, 1-26
World Bank (2014). Ending poverty requires more than growth, says WBG. The World Bank, retrieved from https://www.worldbank.org/en/news/press-release/2014/04/10/ending-poverty-requires-more-than-growth-says-wbg cited Jan. 3, 2020.
World Bank (2016a). Taking on Inequality. The World Bank Group, 1818 H Street, N.W. Washington, DC 20433 USA, www.worldbank.org
World Bank (2016b). Poverty and Shared Prosperity: Taking on Inequality. The World Bank Group, 1818 H Street, N.W. Washington, DC 20433 USA. www.worldbank.org/psp
World Bank (2018). Measuring Financial Inclusion and the Fintech Revolution: Overview. The Glodal Findex database, 2017, The World Bank Group
World Bank Development Indicators (2021), data.worldbank.org. accessed Dec. 20, 2021.
World Bank Development Research Group (2021). www.data.worldbankindicators.org., accessed Dec. 20, 2021.
Zhuang, J., Gunatilake, H., Niimi, Y., Khan, M. E., Jiang, Y., Hasan, R., Khor, N., Lagman-Martin, A., Bracey, P., & Huang, B. (2009). Financial Sector Development, Economic Growth, and Poverty Reduction: A Literature Review. ADB Economics Working Paper Series, No. 173, Asian Development Bank (ADB), Manila
Downloads
Published
Issue
Section
License
Copyright (c) 2022 Journal of Management Info
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish in this journal agree to the following terms:
- Authors retain copyright and grant the journal the right of first publication, with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (see The Effect of Open Access).
