MONETARY POLICY AND DOMESTIC SAVINGS MOBILIZATION IN NIGERIA: AN ARDL BOUND APPROACH

Abstract

The paper examined the effectiveness of monetary policy in enhancing the performance of the Nigerian Commercial Banks in terms of domestic savings mobilization for the period 1980- 2020. The monetary policy variables used were monetary policy rate, treasury bill rate and money supply growth. The paper utilized time series secondary data from the publications of Central Bank of Nigeria (CBN) and International Monetary Fund (IMF). Data were analyzed using Autoregressive Distributed Lag Bound Test. Findings showed that monetary policy conduct was ineffective in enhancing commercial banks performance in domestic savings mobilization over the period. The findings also showed that key variables of monetary policy were weak in driving domestic savings in Nigeria’s banking system. Based on these findings, the study concludes that monetary policy did not really have significant positive effect on domestic savings mobilization in Nigeria over the period under consideration. However, to deepen domestic savings mobilization in Nigeria, policies that will make income to the people inclusive is necessary to boost domestic savings in Nigeria. The paper, therefore, recommends policy strengthening for effective savings mobilization and equitable redistribution of income in Nigeria.