Benue State University, Makurdi

EFFECTIVENESS OF MONETARY POLICY ON LIQUIDITY MANAGEMENT IN NIGERIA

OKWORI, JOSEPH

Abstract

The paper analyzed monetary policy investigating its potency in management of liquidity in Nigeria covering a twenty eight year period of 1986 to 2013, which coincide with the emergence of SAP in the country. Hinging the background of analysis on the Keynesian Liquidity Preference Theory, the study adopted the Ordinary Least Square (OLS) using multiple regression analysis. The study found that monetary policy has not significantly influenced liquidity management in Nigeria during the study period. To this effect, the study recommended among others that the Central Bank should maintain a flexible Monetary Policy Rate so as to prevent commercial banks from liquidity surfeit. Also, the government should complement the monetary authority by providing a good regulatory environment rather than being a liability to the CBN.

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