The Impact of Monetary Policy on Private Capital Formation in Nigeria

This study examined the impact of monetary policy on private capital formation in Nigeria. The central focus of this study was to find out whether monetary policy in Nigeria has brought about significant capital for Private Investment that spurs economic growth. The study made use of secondary data sourced from the Central Bank of Nigeria Statistical Bulletin for the period 1986-2013. The Ordinary Least Square Multiple regression technique was employed alongside the R2 goodness of fit test, F- statistics and the Durbin-Watson tests. The OLS multiple regression obtained result showed that the GDP growth rate has not been attracting significant private investment given the period of study; this implies that the GDP has been growing at a level not sufficient to be able to attract private investment in the economy. Likewise, the money supply and the exchange rate have been relatively stable to also elicit increase in private investment which has in turn and to an extent promote sustainable economic growth in the country through private investment. The domestic credit from financial institutions to the private sector has made its own contribution to growth of Private Investment in the economy. We therefore recommended that to put the Nigerian economy along the path of sustainable growth and development particularly through continous increase in private investment, monetary policy that directs credit to the private sector is expected to be embarked upon so as to encourage private investment.