Effects of Money Demand on Trade Balance in Nigeria

• Authors: Oluwole Jacob Adeyemi , Isiaq O. Oseni , Sheriffdeen A. Tella

Title variants

Wpływ popytu na pieniądz na bilans handlowy w Nigerii

• Languages of publication: EN

Abstracts

EN

Previous studies appear to have concentrated on the effects of currency depreciation on trade balance and macroeconomic policy, while the relationship between money demand and trade balance is scantly documented in the literature. This paper therefore examines the effects of money demand on trade balance in Nigeria. For the analysis conducted, annual time series data covering the period ranging from 1986 to 2018 were used along with the Autoregressive Distributed Lag (ARDL) estimation technique. The long‑run coefficient of money demand was positively signed and statistically significant at 5% level. The positive relationship exhibited by the coefficient of money demand in the long run had a significant influence on trade balance. Thus, this implied that a unit percent increase in money demand would lead to a 1.57% significant increase in trade balance. The implication of this finding was that money demand had significantly influenced trade balance, enhancing the production of goods and fostering investment, which had led to increased growth. The paper recommends that the Central Bank of Nigeria through the Monetary Policy Committee should amend qualitative and quantitative credit control policies with the aim of improving lending to enhance the flow of credit to the real and exporting sector of the economy in order to bring about the desired effect on trade balance. However, the study is limited to an analysis of the existence of the relationship between money demand and trade balance using the Nigerian data set.

PL

Prowadzone przez różnych autorów badania koncentrują się na wpływie deprecjacji waluty na bilans handlowy oraz politykę makroekonomiczną, podczas gdy związek między popytem na pieniądz a bilansem handlowym jest słabo udokumentowany w literaturze. W niniejszym artykule przeanalizowano wpływ popytu na pieniądz na bilans handlowy w Nigerii. Do analizy wykorzystano szeregi czasowe dla danych rocznych z okresu od 1986 do 2018 roku oraz autoregresyjny model o rozłożonych opóźnieniach (ARDL). Długookresowy współczynnik popytu na pieniądz miał znak dodatni i był statystycznie istotny na poziomie 5%. Pozytywne skorelowanie współczynnika popytu na pieniądz w dłuższej perspektywie miało znaczący wpływ na bilans handlowy. Oznaczało to, iż wzrost popytu na pieniądz o 1,57% prowadził do znacznego wzrostu bilansu handlowego o 1,57%. W konsekwencji można stwierdzić, iż popyt na pieniądz miał znaczący wpływ na bilans handlowy, prowadząc do zwiększenia produkcji towarów i promowania inwestycji, co zaowocowało zwiększonym wzrostem. Artykuł zawiera rekomendację, aby Bank Centralny Nigerii, za pośrednictwem Komitetu Polityki Pieniężnej, zmienił jakościową i ilościową politykę kontroli kredytowej tak, żeby usprawnić akcję kredytową i zwiększyć przepływ kredytów do eksportującego sektora gospodarki, w celu uzyskania pożądanego wpływu na bilans handlowy.

Keywords

EN

money demand; trade balance; money stock; domestic credit; ARDL

PL

popyt na pieniądz; bilans handlowy; zasoby pieniężne; kredyt krajowy; ARDL; popyt na pieniądz; bilans handlowy; zasoby pieniężne; kredyt krajowy; ARDL

• Publisher: Uniwersytet Łódzki. Wydawnictwo Uniwersytetu Łódzkiego
• Journal: Acta Universitatis Lodziensis. Folia Oeconomica
• Year: 2020
• Volume: 6
• Issue: 351
• Pages: 23-44

Dates

published

2020-12-15

Contributors

author

Oluwole Jacob Adeyemi

• Chrisland University in Abeokuta, Department of Economics

• https://orcid.org/0000-0002-5681-6987

author

Isiaq O. Oseni

• Olabisi Onabanjo University in Ago‑Iwoye, Department of Economics

• https://orcid.org/0000-0002-6863-5593

author

Sheriffdeen A. Tella

• Olabisi Onabanjo University in Ago‑Iwoye, Department of Economics

• https://orcid.org/0000-0001-9128-2143

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Identifiers

DOI

10.18778/0208-6018.351.02