Structural Changes, Central Banks’ Policy Rates and Savings Behaviour in African Countries : Evidence from Nigeria
This paper examines the impact of new central banks’ policy rates on savings behaviour in African countries, using Nigeria as a case study. The paper investigates the existence and impacts of a structural break in the relationship between the deposit interest rate and aggregate savings in Nigeria in 2006, the year in which the monetary policy rate (MPR) was introduced by the Central bank of Nigeria as the policy rate to serve as the anchor for other interest rates. Based on time-series data spanning 1981 to 2019, the following econometric techniques are employed: (i) The Chow breakpoint test. (ii) The dummy-based structural break technique within the framework of the autoregressive distributed lag (ARDL) cointegration model. The results show that there is a structural break in 2006, with positive short-run and long-run impacts on aggregate savings. However, the impacts of the structural break become unfavourable when exchange rate is included in the ARDL model, suggesting that monetary and exchange rate policies are not well coordinated in Nigeria. The policy implication of these findings is that deposit interest rates will only have optimum impacts on savings behaviour in African countries if monetary and exchange rate policies complement and not contradict each other
Year of publication: |
2022
|
---|---|
Authors: | Ibironke, Sola |
Publisher: |
[S.l.] : SSRN |
Subject: | Nigeria | Sparen | Savings | Geldpolitik | Monetary policy | Afrika | Africa | Strukturwandel | Structural change |
Saved in:
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