Citations


Contact Us

For Marketing, Sales and Subscriptions Inquiries
2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062
USA

Conference List

Financial Risk and Management Reviews

June 2020, Volume 6, 1, pp 1-13

Evaluating the Model of Demand for Money in Nigeria

Fasipe, Temidayo B.

,

Wasiu A. Yusuf

Fasipe, Temidayo B. 1

Wasiu A. Yusuf 2

  1. Central Bank of Nigeria (HQTR), Abuja, Nigeria. 1

  2. Nile University of Nigeria, FCT Abuja, Nigeria. 2

Pages: 1-13

DOI: 10.18488/journal.89.2020.61.1.13

Share :

Article History:

Received: 13 November, 2019
Revised: 19 December, 2019
Accepted: 23 January, 2020
Published: 16 March, 2020


Abstract:

In Nigeria, demand for money is frequently affected by factors that regularly experience shocks in the economy. Therefore, regular adjustment and reforms are done to monetary policy which creates a lot of uncertainties in the market. This paper therefore examined the demand for money (narrow money, M1) in Nigeria, using quarterly time series data from 2006 to 2018, the study attempted multiple OLS regression analysis and ARDL. The result found out that money demand function cannot be appropriately estimated by OLS estimation technique due to the presence of the lagged value of both the dependent and independent variables. Although, the no long run relationship among the variables but the result indicates that M1 is largely influenced by inflation, exchange rate, MPR (Monetary Policy Rate), and savings as well as real GDP to some extent; particularly in the short run. It was observed from the analysis that economic units in Nigeria are shedding more of cash assets (Naira) as inflation increases while stocking up on foreign cash and assets (dollar and foreign denominated assets) as shown by the positive-related exchange rate.
Contribution/ Originality
This study contributes to the existing literature by examining the demand for money (narrow money, M1) in Nigeria and using quarterly time series data from 2006 to 2018, the study attempted multiple OLS regression analysis and ARDL.

Keywords:

Broad money, Monetary policy, Narrow money, Treasury bill, Saving-deposit rate.

Reference:

Baumol, W. J. (1952). The transactions demand for cash: An inventory theoretic approach. The Quarterly Journal of Economics, 66(4), 545-556. Available at: https://doi.org/10.2307/1882104.

Ben-Salha, O., & Jaidi, Z. (2014). Some new evidence on the determinants of money demand in developing countries–A case study of Tunisia. The Journal of Economic Asymmetries, 11, 30-45. Available at: https://doi.org/10.1016/j.jeca.2014.06.001.

Bhattarai, K. (2014). Money and economic growth. The Journal of Economic Asymmetries on Science Direct, 11(June), 8-18.

Busari, D. (2005). On the stability of money demand function in Nigeria. Financial and Economic Review, CBN.

Central Bank of Nigeria (CBN). (2018). Banks and other financial institutions act 1991 (As amended in 1997, 1998, 1999 and 2002.

Darrat, A. F. (1986). Money, inflation, and causality in the north African countries: An empirical investigation. Journal of Macroeconomics, 8(1), 87-103. Available at: https://doi.org/10.1016/0164-0704(86)90035-2.

Dou, X. (2018). The determinants of money demand in China. Cogent Economics & Finance, 6(1), 1564422.

Essien, E. A., Onwioduokit, E. A., & Osho, E. T. (1996). Demand for money in a debt-constrained economy: A case study of Nigeria. Economic and Financial Review, 34(2), 579-605.

Friedman, M. (1956). The quantity theory of money – A restatement In M. Friedman. Studies in quantity theory of money: Chicago University Press.

Iyoboyi, M., & Pedro, L. M. (2013). The demand for money in Nigeria: Evidence from bounds testing approach. Business and Economics Journal, 2013, BEJ-76.

Keynes, J. M. (1930). The general theory of employment, interest and money: John Maynard Keynes.

Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics, 16(3), 289-326. Available at: https://doi.org/10.1002/jae.616.

Research Department Central Bank of Nigeria. (2016). Monetary policy education in economic series, 2. Nigeria: Central Bank pf Nigeria.

Tobin, J. (1956). The interest-elasticity of transactions demand for cash. The Review of Economics and Statistics, 38(3), 241-247.

Statistics:

Google Scholor ideas Microsoft Academic Search bing Google Scholor

Funding:

This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.

Acknowledgement:

Both authors contributed equally to the conception and design of the study.

Related Article

( 1 ) Evaluating the Model of Demand for Money in Nigeria
( 2 ) Evaluating the Effectiveness of CAPM and APT for Risk Measuring and Assets Pricing
( 3 ) The Development of Participated Environmental Education Model for Sustainable Mangrove Forest Management on Eastern Part of Thailand
( 4 ) The Impact of Human Capital on Economic Growth: Evidence from Tunisia Using Star and Stecm Models
( 5 ) An Inventory Model with Lost Sale is Time Dependent
( 6 ) A Model of Strategic Thinking: Islamic and Iranian Perspective
( 7 ) Stock Market Performance and Economic Growth: Evidence from Nigeria Employing Vector Error Correction Model Framework
( 8 ) Workplace Bullying: Modelling Construct Validity in an Australian Public Sector Workforce
( 9 ) Estimating Value at Risk for Sukuk Market Using Generalized Auto Regressive Conditional Heteroskedasticity Models
( 10 ) Dynamic Analysis of Competitive Technology Innovation Diffusion Model
( 11 ) A Review upon the Changes Which Come With the Model upon Turkish Metropolitan Municipality within the Provincial Administrative Boundaries
( 12 ) Confirming the Mediation Effect of A Structural Model By Using Bootstrap Approach: A Case Study of Malaysian 8th Grade Students’ Mathematics Achievement
( 13 ) The Effect of Exchange Rate Changes on Consumer Prices in Nigeria: Evidence from VECM Model
( 14 ) Examining Long Run Relationship between Household Debt and Household Savings in South Africa – An Error Correction Model and Granger Causality
( 15 ) Comparative Analysis of the Effectiveness of Coub-Douglas, Real Business Cycle, and Keynsian Growth Models in Determining Economic Growth in Nigeria
( 16 ) An Econometric Planning Model of Urban Forestry as a Measure of Sustainability: A Matrix of Action and Change
( 17 ) On the Prediction of the Inflation Crises of South Africa Using Markov-Switching Bayesian Vector Autoregressive and Logistic Regression Models
( 18 ) Triple Hurdle Model with Zero Expenditures
( 19 ) Dutch Disease: Myth or Reality? An Analysis of the ARDL Model
( 20 ) Consumers’ Behavioural Intention to Adopt Mobile Banking in Rural Sub-Saharan Africa Using an Extension of Technology Acceptance Model: Lessons from Zimbabwe
( 22 ) Structural Breaks and the Long-Run Stability of Demand for Real Broad Money Function in Nigeria: A Gregory-Hansen Approach
( 23 ) Investigating the Demand of Small Hotel and Restaurant Businesses for Bank Financing: The Case of Turkey
( 24 ) Determinants of Import Demand Functions of Pakistan: An ARDL Bound Testing Approach
( 25 ) The Nexus between Urbanization, Energy Demand and Healthcare in Bangladesh
( 26 ) Impact of Asymmetric Government Spending on Real Balances Demand
( 27 ) German Exports, Economic Growth and Foreign Demand: An Analysis of the Period 2000–2017
( 29 ) Consideration the Relationship Between Information Communications Technology and Economic Growth in Top 10 Economic
( 31 ) The Impact of Investment Climate Reforms on the Development of Small and Medium Sized Enterprises in Nigeria: A Policy Brief
( 32 ) Importance of Corporate Governance Quality and Voluntary Disclosures of Corporate Governance Information in Listed Malaysian Family Controlled Businesses
( 33 ) How Telecommunication Development Aids Economic Growth: Evidence from Itu Ict Development Index (IDI) Top Five Countries for African Region
( 34 ) Development of Logarithmic Equations for Statistical Sample Determination
( 35 ) A Review on Criteria for Green Infrastructure to be Adopted by Local Authorities
( 36 ) Cross-Cultural Leadership Intelligence: Recommendations for Kenya
( 37 ) Improved Performance Through Empowerment of Small Industry
( 38 ) Challenges of Human Rights Abuses in Nigerian Democratic Governance – Which Way Forward ?
( 39 ) Teachers Characteristics and Students’ Performance Level in Senior Secondary School Financial Accounting
( 40 ) Survey of Students’ Academic Achievement and Mathematics Identity-Formation
( 41 ) Ensuring Quality Provision of Education for All: Discovering Challenges Faced by Teachers of Students with Learning Disabilities in Regular Primary Schools in Masvingo District
( 42 ) A Study of Transnational and Transformation Leadership Styles and Factors Affect The Leadership Style
( 43 ) The Role of Information and Communication Technology in Rural Socio-Economic Development in Africa
( 44 ) Conceptual Framework of Green Infrastructure Performance Evaluation for Local Authority
( 45 ) Social Security; A Public Policy for Good Governance in Nigeria: The Role of Nigerian Legislature
( 46 ) Foreign Direct Investment (FDI) and Employment: A Case of Province of Punjab, Pakistan
( 47 ) Government Borrowing Behaviour: Implications for Private Sector Growth in Nigeria
( 48 ) The Association Between Corporate Risk Disclosure and Firm Performance in Emerging Country – The Case of Egypt
( 49 ) Moderating Effect of Demographics on Monetary Motivation and Employees Job Performance Relationship: Evidence from Malaysia
( 50 ) Is Brics a Viable Solution for Russia in the Context of the Present Eu’s Economic Sanctions?
( 52 ) The Impact of Dividend Policy on Shareholders’ Wealth before and After Financial Melt down: Evidence from FMCG Sector in India
( 54 ) The Biodiesel Market in Brazil and the Prospects for the Sector
( 55 ) Challenges and Survival Strategies for Women in Small Scale Catering Business: A Case Study of Siyaso Magaba, Mbare
( 56 ) The Influence of Information Technology and Communication Supply Chain Management Performance for Greater SME Manufacturing in Aguascalientes
( 57 ) Emergent Behavior of “Rational” Agents in Some Forgotten N-Person Games
( 58 ) Leveraging Telematics for Optimal Fleet Performance
( 59 ) Income Elasticity of Poverty: Estimates for South Asian Countries
( 60 ) Profit And Loss Sharing As an Offshoot for Bank Stability: A Comparative Analysis
( 61 ) The Potential of Rural–Urban Linkages for Sustainable Development and Trade
( 63 ) Role of Foreign Investment and External Debt in Determination of Exchange Rate
( 64 ) An Assessment of the Impact of Information Communication Technology (ICT) On the Administration of Public Records: A Case Study of the Bolgatanga Municipal Assembly in the Upper East Region of Ghana-West Africa
( 65 ) The Effects of Changes in Accounting Standards on Value Relevance of Financial Statement Information of Malaysia and Nigeria Banks
( 67 ) Share Options, Share Award and Firm’s Performance: Evidence from Malaysian Public Listed Companies
( 68 ) The Effect of Outsourcing on Anglogold Ashanti Obuasi Mines Performance
( 69 ) Insecurity and Foreign Direct Investment in Nigeria
( 70 ) The Mediating Effect of Market Orientation on the Relationship between Entrepreneurial Orientation Dimensions and Organizational Performance: A Study on Banks in Libya
( 71 ) Various International Experiences in Waste Management - Useful Lessons for Algeria
( 72 ) The Investment Performance of Socially Responsible Investment in Japan
( 74 ) A Review on EU Transportation Projects within the Case of Turkey for European Union Regional Development Policy
( 75 ) Land Use/Land Cover Change and its Effects on Bamboo Forest in Benishangul Gumuz Region, Ethiopia
( 76 ) Appointment of Directors and Performance of Deposit Money Banks in Sub Saharan Africa: Do We Need More Executive or Non-Executive Directors?
( 77 ) Development of the National Economies and the Foreign Trade Relations between Ukraine and Bulgaria (In the Period 2005-2014)
( 78 ) Emotional Workgroup Performance and Group Effectiveness Egyptian Context
( 79 ) Forecasting-Based Carry Trade Using Pegged Currency: A Case of Omani Rial
( 80 ) The Indirect Impact of Overconfidence on the Performance of Tunisian Firms Through their Financing Structure
( 81 ) A Theoretical Analysis Upon the Environmental Health and Justice Issue: A Case Study for a Comparison Between G20s Unitary and Federal Members
( 82 ) Academic Mobility for Engineering and Technology Graduates in Africa: Lessons and Experiences from the Implementation
( 83 ) Rice Farmer and Capital Formation: A Case Study of Rice Farmer's Credit Cooperative in Itoikin, Ikosi-Ejirin LCDA, Lagos State
( 84 ) How the Principles of the Sharing Economy Can Improve Organizational Performance of the US Public School System
( 85 ) Effect of Budget Defict on Private Investment in East African Community for the Period 1981-2015: A Panel Data Analysis
( 87 ) Relevance of Stakeholders Theory, Organizational Identity Theory and Social Exchange Theory to Corporate Social Responsibility and Employees Performance in the Commercial Banks in Nigeria
( 88 ) Analyzing Factors Affecting the Success of Social Media Posts for B2b Networks: A Fractional-Factorial Design Approach
( 89 ) The Influence of Communication, Work Motivation and Career Development on Elementary School Teacher’s Job Performance in Medan, Indonesia
( 90 ) Effects of Corporate Social Responsibility on Banks Financial Performance in Nigeria: A Study of United Bank of Africa
( 91 ) Construction and Application of Water Resource Accounting Information System in Taiwan
( 92 ) Is Alumni Salary an Appropriate Metric for University Marketers?
( 93 ) Participatory Processes in Planning for Self-Help Housing Provision in South Africa: Policies and Challenges
( 94 ) The Moderating Effect of Governance Mechanisms on the Relationship Between Innovation Strategy and the Performance
( 95 ) Public-Private Partnership as a Strategy for E-Governance Funding in Africa: The Gains and the Pains
( 96 ) Employee Loyalty and Organizational Citizenship Behaviour in the Port Harcourt Area Command of the Nigeria Police Force
( 97 ) Effect of Institutional Factors on Foreign Direct Investment in Nigeria
( 98 ) Macroeconomic Indicators and Capital Formation Growth in Nigeria: A New Evidence
( 99 ) Foreign Capital Inflows and Unemployment in Nigeria: A New Evidence from ARDL-Bounds Testing Approach
( 100 ) Electronic Banking Innovations and Selected Banks Performance in Nigeria
( 101 ) An Empirical Investigation into the Key Drivers of Economic Performance in the CEMAC Zone: A Panel Corrected Standard Errors Approach
( 102 ) Forecasting Equity Index Volatility: Empirical Evidence from Japan, UK and USA Data
( 103 ) Disaggregated Foreign Capital Inflows and Economic Growth in a Developing Economy: Empirical Evidence from Nigeria
( 104 ) The Importance of Public Administration Towards Achieving Good Governance for Positive National Development by Using SmartPLS 3
( 105 ) Assessment of Dual Carriageway for Sustainable Socio-Economic Development in Ado Ekiti, Nigeria
( 106 ) Industrialization and Economic Growth in Sub-Saharan Africa: The Role of Human Capital in Structural Transformation
( 107 ) Trade Policy and Democracy for Development in Central African Countries
( 108 ) Exchange Rate and Foreign Reserves Interface: Empirical Evidence from Nigeria
( 109 ) Forecasting Prices of Three Important Agricultural Crops in Bangladesh
( 110 ) External Debt and Economic Growth: Two-Step System GMM Evidence for Sub-Saharan Africa Countries
( 111 ) The Impact of Organisational Culture on Public Sector Performance: A Case Study of Local Authorities in Zimbabwe
( 112 ) Foreign Direct Investment in Zimbabwe: The Role of Uncertainty, Exports, Cost of Capital, Corruption and Market Size
( 113 ) Gamification on Sales Force Performance in Nigeria Bottling Company
( 114 ) Foreign Direct Investment - Growth Linkage in Sub-Saharan Africa: Is Governance a Mediating Factor?
( 115 ) An Investigation of the Impact of Organisational Structure on Organisational Performance
( 116 ) Study on the Effect of Foreign Investment on Anhuis Industrial Structure Optimization
( 117 ) Exploring the Asymmetric Linkage between Commodity Prices and Fiscal Performance in Nigeria
( 118 ) Assessing the Perceived Value of Customers for being Satisfied towards the Sustainability of Hypermarket in Malaysia
( 119 ) Effects of Socio-Cultural Diversity on the Performance of Private Health Care Organizations in Kogi State
( 120 ) Organizational Memory and Employee Performance in Federal Parastatals in Enugu State of Nigeria
( 121 ) The Effect of Corporate Social Responsibility Disclosure on Corporate Financial Performance
( 122 ) Exchange Rate Pass-through to Prices: VAR Evidence for Albania
( 123 ) Can Small-Cap Active Funds Substantially Outperform the Market Over Time?
( 124 ) Exchange Rate Volatility, Foreign Exchange Market Intervention and Asymmetric Preferences
( 125 ) Value for Money (VFM) Audit and Public Sector Performance in Afikpo North Local Government Area of Ebonyi State, Nigeria
( 127 ) Multivariate Analysis in Formulation of the Benefit-Cost Index Related to the Sugarcane Production System in the Quirinopolis Municipality Productive Center, Goias, Brazil
( 128 ) Does External Borrowing Affect Economic Growth? A Revisit of the Age-Long Debate for Nigeria
( 129 ) Determinant of MSMEs Performance and its Impact on Province GRDP in Indonesia
( 130 ) Perceived Poverty and Alleviation Efforts of Kogi State Community and Social Development Agencies in Kogi State: An Empirical Investigation
( 131 ) Determinants of Financial Performance and its Impact on the Growth of Islamic Bank Assets on Indonesia
( 132 ) The Role of Social Security Program for Enhancing Seniors Longevity
( 133 ) Trade Union Performance and Industrial Relations Climate in the Nigerian Petroleum Sector
( 134 ) An Empirical Investigation of Real Exchange Rate Responses to Foreign Currency Inflows: Revisiting the Dutch Disease Phenomenon in South Asia
( 136 ) Entrepreneurship Training for Mitigating Unemployment in Nigeria: How have the Tertiary Institutions Fared?
( 138 ) Do Derivative Instruments Increase Firm Risk for Indonesia Non-Financial Companies?
( 139 ) Determinant of Tax Revenue Effort in Sub-Saharan African Countries: A Stochastic Frontier Analysis
( 141 ) The Phenomenon of Money Politics and Nigeria’s Democratization: An Exploration of the Fourth Republic
( 142 ) A Mixed-Methods Study to Explore Stage of Readiness and Intention of Micro and Small Enterprises to Adopt Mobile Money in Indonesia
( 144 ) Dynamics of Inflation, Economic Growth, Money Supply and Exchange Rate in India: Evidence from Multivariate Analysis
( 145 ) Sectoral Credit Allocation of Deposit Money Banks and Poverty Reduction in Nigeria
( 148 ) Contemporary Approach to Enhanced Road Transport System in Nigeria Through the Application of It-Based (Online) Bus Ticketing and Payment System
( 149 ) Impact of Labour, Capital and Human Resources in Productivity of Transport Firms in Nigeria
( 151 ) Gaining Trust After the Financial Crisis in the Nigerian Economy: A Conceptual Framework
( 152 ) An Enquiry into the Contributions of Microfinance Institutions Towards the Development of Small Scale Business in Nigeria
( 153 ) Exchange Rate Movements, Import And Economic Growth in Nigeria (1986-2010)
( 155 ) Public Infrastructure Spending and Economic Growth in Nigeria: An Error Correction Mechanism (ECM) Approach
( 156 ) Impact of Microfinance Lending On Economic Growth of Third world Nations: Study of Nigeria
( 157 ) Anti-Corruption Crusade in Nigeria: More Words Than Deeds
( 159 ) National Urban Development Policy and the Unanswered Development Question of Slum in Nigeria
( 161 ) Effective Tax Administration and Institutionalization of Accounting Systems in Small and Medium Scale Enterprises: Evidence from Nigeria
( 162 ) The Impact of Rice Production, Consumption and Importation in Nigeria: The Political Economy Perspectives
( 163 ) Good Governance, Rural Development and Poverty Alleviation in Nigeria: Issues and Challenges
( 164 ) Federalism and Planning in Nigeria
( 167 ) Rural Saving Mobilizations and Economic Development in Akamkpa Local Government Area of Cross River State - Nigeria
( 169 ) Nigerian Politics, Economic Development, and the Role of Human Rights Organisations on Elections
( 172 ) An Assessment of the Relationship between Budget Deficit Syndrome and Consumer Welfare in Nigeria (1985 – 2014)
( 173 ) Determinants of Share Price Movement in Nigeria -The Management Perspective
( 174 ) Market Share and Profitability Relationship: A Study of the Banking Sector in Nigeria
( 176 ) Quality of Accounting Reporting After the IFRS Adoption in Nigeria
( 177 ) Structural Breaks, Electricity Generation and Economic Growth in Nigeria
( 179 ) Implications of Crude Oil Price Volatility and Parallel Exchange Rate Fluctuation on the Cost of Living in Nigeria
( 180 ) National Security and Democratization in Nigeria: The Case of Insurgence
( 181 ) The Link Between Agricultural Budgetary Allocation and Economic Growth in Nigeria