Nigeria's Monetary Survey: 2001--2012

• Activity Number: 83
• Type: Contributed
• Date/Time: Sunday, August 4, 2013 : 4:00 PM to 5:50 PM
• Sponsor: Business and Economic Statistics Section
• Author(s): Chioma Nwosu+ and Phebian N. Bewaji*+
• Companies: Central Bank of Nigeria and Central Bank of Nigeria
• Keywords: monetary survey ; analytical balance sheet ; money holding behaviour ; payment system ; nominal output

Abstract

Information derived from monetary aggregates, ex-ante or ex-post remains relevant and particularly so for monetary targeting economies. This paper examines the structure of monetary assets in Nigeria, analyzes the components of Nigeria's monetary survey and the relative contributions of its components using descriptive statistics. The paper shows that Nigeria's monetary survey remains a useful tool in the analysis of monetary development and its linkages with key sectors of the economy; convey useful insight on the evolution of the payment system and money holding behavior. Findings indicate that Nigeria's broad money aggregate was largely determined by external factor (net foreign assets) pre-2007 global financial crisis, while domestic factor (mainly credit) had significant implications for monetary management post-2007. Private sector credit was inversely related to nominal output, while transaction money was only able to predict turning points in output conditions post-2008. Results also suggest an evolving money holding behavior that reflects a preference to hold money as a store of value and for transactionary motives, rather than to hold cash as a monetary asset. The declining trend in the share of currency (cash) in monetary assets further reflects the evolution of alternative payment methods for economic transactions.