Affiliation:
1. Obafemi Awolowo University, Faculty of Social Sciences, Economics Department, Ile-Ife, Osun State, Nigeria
Abstract
Understanding the effect of the extent of financial intermediation on the
performance of monetary policy transmission channels is crucial to the
formulation of monetary policy. To this end, the paper tested the validity
of the above statement in the Nigerian context using quarterly data between
2005Q1 and 2019Q4. The data was analysed using a dynamic stochastic general
equilibrium approach. Results of the estimation showed that the financial
crisis experienced in the country led to the depression of the Nigerian
capital market and a decrease in the amount of credit provided by banks for
trading in the capital market, exchange rate risk tightening of liquidity,
and greater loan-loss provisioning. It was revealed that recent changes and
reforms in the industry have positive impacts on all the monetary policy
transmission channels (exchange rate, interest rate, expectation, and
credit) considered in the study. However, the credit channel appeared to be
the most active as it transmits the largest impact of shocks to the
financial sector (88.06 per cent on average) to the real economy. This
demonstrates that the private sector depended on the financial sector for
?nancing their expenditures, which later induced an increase in the level of
investment and increased output.
Publisher
National Library of Serbia
Reference36 articles.
1. Abdel-Baki, M. (2010). Alterations in monetary transmission mechanism in Egypt in the wake of the triple-F crisis. Investment Management and Financial Innovations, 7(2), 217-227.
2. Adebiyi, M. A., & Mordi, C. O. (2011). Building dynamic stochastic general equilibrium models for monetary policy analysis. Economic and Financial Review, 49(1), 1-24.
3. Adjemian, S. (2013). Bayesian estimation of DSGE models. Universite du Maine, GAINS & CEPREMAP.
4. Ajilore, T., & Ikhide, S. (2013). Monetary policy shocks, output and prices in South Africa: A test of policy irrelevance proposition. The Journal of Developing Areas, 47(2), 363-386.
5. Akinlo, A., & Apanisile, O. (2019): Monetary policy shocks and effectiveness of channels of transmission in Nigeria: A dynamic stochastic general equilibrium approach. Global Business Review, 20(2), 331-353.