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Assessing the Effectiveness of Monetary Policy in Driving Informal Sector Growth: Evidence in Nigeria
By: Nwakpa Solomon S.
Journal: African Journal of Economic Transformation and Development | Volume: 1 | Issue: 1 | Pages: 80–99
Published by: African Journal of Economic Transformation and Development, African Academic Imprint Press, 7/1/2026 2026
ISSN (Online): 3156-5352 | ISSN (Print): 3156-5123 | JEL Classification: E52, E51, E43, E58, O17, C32
Abstract
This study investigated the impact of monetary policy instruments on informal sector GDP growth in Nigeria between 1986 and 2024. The research was motivated by the persistent challenge of ineffective policy transmission in a dual economy characterized by a dominant informal sector. Using the Auto-Regressive Distributed Lag (ARDL) Bounds Testing approach, the study confirms a long-run equilibrium relationship between monetary policy instruments and informal sector growth.
Keywords: Monetary policy rate, Cash reserve ratio, Commercial bank lending rate, Money supply, Institutional quality, Informal sector growth
JEL Classification: E52, E51, E43, E58, O17, C32
How to Cite
Nwakpa, S. S. (2026). Assessing the Effectiveness of Monetary Policy in Driving Informal Sector Growth: Evidence in Nigeria. African Journal of Economic Transformation and Development (AJETD), Vol. 1(1), 80–99.
Licensing Terms: All articles published in the African Journal of Economic Transformation and Development (AJETD) are licensed under a
Creative Commons Attribution 4.0 International License (CC BY 4.0)
.
Creative Commons Attribution 4.0 International License (CC BY 4.0)
.