Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237434 
Year of Publication: 
2020
Citation: 
[Journal:] CBN Journal of Applied Statistics [ISSN:] 2476-8472 [Volume:] 11 [Issue:] 2 [Publisher:] The Central Bank of Nigeria [Place:] Abuja [Year:] 2020 [Pages:] 201-230
Publisher: 
The Central Bank of Nigeria, Abuja
Abstract: 
This paper assesses the monetary policy response of the Central Bank of Nigeria(CBN) to increases in capital inflows into Nigeria using monthly time series datafrom January 2009 to December 2017. It presents an econometric assessment of thedegree to which the CBN sterilizes net foreign assets (NFA) in response to the cap-ital flows, using Autoregressive Distributed Lag (ARDL) Bounds testing approach.The long run sterilization coefficient obtained suggests that the CBN successfullyoffset 95per cent of capital inflows in the period of analysis. Against the back-ground of rising financial instability in Nigeria, the study illustrates how steriliza-tion has not adequately tackled the major risks of capital inflows which resultedin asset price bubbles and bursts, equity capital inflows reversal, banking crisis,and currency depreciation which contributed, partly, to the economic recession in2016. The paper argues that effective policy response to capital inflows must ade-quately address the major downside risks of capital inflows in the short and mediumterms through some clearly defined capital flows management and macro-prudentialmeasures.
Subjects: 
Assets price
capital flows
impossible trinity
sterilization
JEL: 
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Article

Files in This Item:
File
Size
346.31 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.