Monetary Policy and Manufacturing Capacity Utilization: Further Evidence from Nigeria

Sunday Osahon Igbinedion and Frank Iyekoretin Ogbeide
Additional contact information
Sunday Osahon Igbinedion: University of Benin, Nigeria
Frank Iyekoretin Ogbeide: University of Benin, Nigeria

South-Eastern Europe Journal of Economics, 2016, vol. 14, issue 2, 159-174

Abstract: This study investigates the nexus between monetary policy and manufacturing capacity utilization in Nigeria for the 1980-2014 period, using an error-correction modelling approach. The results reveal that both current and past values of ­lending rate adversely affect manufacturing performance, but ­manufacturing responds positively to the current period's banking credit, confirming that policy to enhance access to funds can stimulate investment in manufacturing sub-sector in Nigeria. Real exchange rate shows mixed performance; the current exchange rate has a negative but insignificant effect, whereas the impact of the one-period lagged value was positive and significant at 5%. Broad money supply positively and significantly influences manufacturing. The error-correction term is significant and correctly signed. Further, the variance decomposition shows shock in monetary policy phenomena, explainsrelatively significant variations in manufacturing performance. This study recommends that monetary authorities should implement policies in line with the structure of the economy to enhance contribution of manufacturing sector to overall economic growth. Effort should be made to enhance the flow of credit to the economy, while adopting effective exchange rate management in a stable macroeconomic environment to boost industrial production.

Keywords: Monetary Policy; Capacity Utilization; Nigeria (search for similar items in EconPapers)
JEL-codes: E43 E52 L60 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.asecu.gr/Seeje/issue27/issue27-igbinedion-ogbeide.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:seb:journl:v:14:y:2016:i:2:p:159-174

Access Statistics for this article

More articles in South-Eastern Europe Journal of Economics from Association of Economic Universities of South and Eastern Europe and the Black Sea Region Contact information at EDIRC.
Bibliographic data for series maintained by Ms. Melina Petromelidou ().