Determinants of Money Supply in Nigeria

Evidence from Autoregressive Distributed Lag Approach

Abstract

This study examined the determinants of money supply in Nigeria from 1981 to 2019. The data for the study was collected from Central Bank of Nigeria (CBN) Statistical Bulletin 2019 and analyzed using Auto Regressive Distributed Lag (ARDL) bound testing model developed by Pesaran, Shin and Smith (2001). The empirical findings of the study provided evidence that inflation rate, gross domestic product growth and monetary base are the major determinants of money supply in Nigeria both in the long run and short run. The study therefore recommended that for the purpose of achieving better economic stability through the management of money stock, the Central Bank should seek to regulate and control the above major determinants as they significantly influenced the growth of money supply in Nigeria.