Monetary Policy and Entrepreneurial Growth in Nigeria

MONETARY POLICY AND ENTREPRENEURIAL GROWTH IN NIGERIA

Isoboye Jacob Damieibi, PhD

Captain Elechi Amadi Polytechnic Rumuola

Port Harcourt

&

Ihenetu  Hyginus I., PhD

Department of Banking and Finance

Captain Elechi Amadi Polytechnic Rumuola

Port Harcourt

Abstract

The paper evaluated the effect of monetary policy and entrepreneurial growth in Nigeria. Data were collected from CBN statistical bulletin for twenty eight (28) years. Ex post facto design was employed for the study. Auto-regressive and distributive lag model was adopted for the analysis after the data were stabilized through Augumented Dicky Fuller (ADF) unit root test. The findings showed that monetary policy rate, treasury bill rate, liquidity ratio and loan to deposit ratio had no significant effect on entrepreneurial growth in Nigeria but the combination of these variables had positive and significant effect on entrepreneurial growth in Nigeria during the period of the study. The coefficients of these variables were positive which suggested a positive drive on entrepreneurial growth in Nigeria. The researchers therefore recommend that: monetary authorities should reduce the monetary policy rate to encourage bank to lend more money and thereby enhance the growth of entrepreneurs in Nigeria, monetary authorities should buy the treasury bills more rather than selling to push out money through deposit money bank for entrepreneurs to borrow, liquidity ratio should be reduced for banks to have more  loanable funds to lend to entrepreneurs and loan to deposit ratio should increase to ensure that entrepreneurs have more access to funds

Key words: Monetary Policy, Entrepreneurial Growth, Treasury Bill Rate, Liquidity Ratio,  Monetary Policy Rate, Loan to Deposit Ratio etc.


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