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This study examined the impact of CBN monetary policy on informality in Nigeria over the
period 1970-2011 using an ordinary least squares methodology. The results indicate that
money supply impacts positively and significantly on informality; while other monetary
variables such as minimum rediscount rate, exchange rate, inflation rate, and liquidity ratio
do not impact significantly on informality in Nigeria. This finding implies that
expansionary monetary policy that favours increased money supply in Nigeria encourages
informality. The results further indicate that the burden of taxation and government
regulatory activities in the economy are significant drivers of informality in Nigeria.