The Central Bank Balance Sheet as a Tool for Monetary Policy: Evidence from Nigeria

E. U. Kure (), O. O. Mbutor (), U. A. Rotimi () and Y. Adamu ()
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E. U. Kure: Central Bank of Nigeria
O. O. Mbutor: Central Bank of Nigeria
U. A. Rotimi: Central Bank of Nigeria
Y. Adamu: Central Bank of Nigeria

Economic and Financial Review, 2019, vol. 57, issue 2

Abstract: The study examined the impact of the Central bank of Nigeria’s (CBN) balance sheet on the growth of private sector credit, economic growth and price stability during the period 2006-2017. Balance sheet indicators used were total assets of the CBN and proxy for asset distribution. Employing a vector autoregressive (VAR) model, the study found balance sheet policies to be effective in reducing cost of credit, increase in bank lending, economic activities and a decline in inflation. However, the effects favour asset dispersion (credit easing) against growth in assets (quantitative easing), implying that the Bank can, in the short- to medium-term, sustain its intervention programmes on the economy, but that the programmes, are more effective when the CBN acts as a banker’s bank.

Keywords: Banks; Quantitative Easing; Central Banks and Policies; Monetary Systems; Financial Markets; Macroeconomy (search for similar items in EconPapers)
Date: 2019
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