Central Bank Of Nigeria Research Articles

Electronic Fraud and Performance of Deposit Money Banks in Nigeria: 2008-2018

This research work examined electronic fraud and performance of Deposit Money Banks in Nigeria. It is a truism that Nigerian banks have lost of a lot of profit owing to the nefarious activities of fraudulent people including some unscrupulous elements in the banking industry who connive with fraudsters to perpetrate fraud of different magnitude. To this end, the Central Bank of Nigeria in conjunction with Nigeria Bankers Committee  established Nigeria Electronic Fraud Forum (NeFF) with the sole aim of monitoring online banks transactions and reporting any financial regulation infringements. Specifically, the objectives of this research work are to analyse the relationship between ATM fraud and performance of DMBs in Nigeria and to evaluate the relationship between POS fraud and performance of DMBs in Nigeria. The data collected were analyzed using basic descriptive ordinary least square (OLS) and multivariate regression panel data setting with econometric analyses. The results showed negative and insignificant relationship between electronic fraud channels and financial performance variables. The study concluded that there is no significant relationship between electronic fraud and financial performance of Deposit Money Banks in Nigeria in the period of study. The study recommended improved collaborations between DMBs, CBN and other stake holders via NeFF to tackle fraud.

Money Supply and Private Sector Funding in Nigeria: A Multi-Variant Study

This study examined the effect of money supply on private sector funding in Nigeria. The purpose of the study was to examine the extent to which monetary policy affect private sector funding in Nigeria. Time series data was sourced from Central Bank of Nigeria Statistical Bulletin from 1985-2018. Credit to private sector, credit to core private sector and credit to small and medium scale enterprises sector was used as dependent variables while narrow money supply, broad money supply, large money supply, private sector demand deposit was used as independent variables. Ordinary Least Square (OLS), Augmented Dickey Fuller Test, Johansen Co-integration test, normalized co-integrating equations, parsimonious vector error correction model and pair-wise causality tests were used to conduct the investigations and analysis. The empirical findings revealed that money supply explains 82.1 percent variation on credit to core private sector, 85.2 percent and 23.4 percent of the variation in credit to private sector and credit to small and medium scale enterprises sector. The study conclude that money supply has significant relationship with credit to private sector, credit to core private sector and credit to small and medium scale enterprises sector. From the findings, the study recommends that Central Bank of Nigeria should induce the variations of the amount of money changes through the nominal interest rates. That the monetary authorities should ensure adequate quantity of money supply that positively affect private sector funding in Nigeria.

Response of Deposit Money Banks to Monetary Policy Dynamics in Nigeria

This study examined how banks react to the monetary policies transmission mechanisms of the central bank of Nigeria. The data employed were collected from Nigerian Deposit Insurance Cooperation and Central Bank of Nigeria and subjected to various finametric techniques. The major findings are that cash reserve ratio negatively and significantly affects the performance of deposit money banks in Nigeria, while other monetary policy variables exert insignificantly to the performance of deposit money banks. It was also found that apart from banks own shock; banks respond negatively to shocks from major monetary policy instruments. It was observed that Monetary Policy Rate causes bank performance in both in the short run and long run. While, Cash Reserve Ratio, Liquidity Ratio and Saving Deposit Rate do not cause bank performance in the short run but in the long run. It was also found that monetary policy instruments jointly cause bank performance in the short and long run as opposed by individual instruments in Nigeria. The researchers therefore suggest among others that central bank of Nigeria reduce the cash reserve ratio to enable deposit money banks extend more loans to their potential customers, thereby enhance performance.

The New Credit Risk Protection Clause for Nigerian Commercial Banks: Efficacy and Limitations

A major challenge which has continuously bedeviled Nigerian banks is the burden of non-performing loans (NPLs). Data from the Nigerian Bureau of Statistics reveal that NPLs stood at N1.44 trillion at the end of the second quarter of 2019. This was about 9.3% of total loans in the banking sector and the first time in 40 months that NPL ratio would be in single digit. Despite rising NPLs, lack of access to credit has remained the bane of most businesses in Nigeria. In recent times, the Central Bank of Nigeria (CBN) has initiated measures aimed at improving credit culture as well as credit risk management. One of such initiatives was the resolve of CBN and Bankers’ Committee at the Committee’s 345th to introduce a credit risk protection clause in loan agreements. This discourse examines the efficacy and limitations of this initiative.

Agro-financing and food production in Nigeria

This study examines how agro-financing impacts on food production in Nigeria supporting Goal 2 of the 2030 Sustainable Development Goals (SDGs) which aims to “end hunger, achieve food security, improve nutrition, and promote sustainable agriculture”. The study covers the period 1981–2018 using annual data sourced from the World Development Indicators (WDI) of the World Bank, Central Bank of Nigeria (CBN) Statistical Bulletin. The Johansen and the Canonical Cointegration approaches are employed and findings reveal that agro-financing is statistically significant in explaining the level of food production in Nigeria.The result implies that a 1% increase in farmers' access to agricultural finance is associated with an increase in food production by 0.002%–0.006% depending on the model specification. This result aligns with the ‘a priori’ expectations as it is expected that more agro-funding at low-interest rates motivates farmers to secure high-yield seedlings, machinery and other farm implements, organic inputs that positively impact on total agricultural yield, leading to more food production. Therefore, the study recommends that more funding be allocated to the agrarian sector with less stringent credit conditions, and more arable land be allotted for farming purposes amongst others.

Knowledge Management Strategies and Profitability of Selected Deposit Money Banks in Nigeria

This study examines the knowledge management strategies on profitability of selected deposit money banks in Nigeria. The study employed the survey research design. The population was 2,405 management staff of the selected deposit money banks in Nigeria. The sample size of 481 was determined using Krejcie and Morgan table. Multi-stage sampling was used to select the respondents. A validated questionnaire was used for data collection. The result revealed that knowledge management strategies had significant influence on the profitability (Adj.R2 = 0.520, F(2, 429) = 234.452, p < 0.05) in the selected deposit money banks in Nigeria. The study concludes that knowledge management strategies contributed to profitability of deposit money banks in Nigeria. The study recommends that person-to-person transfer of knowledge should be improved on. Finally, the Central Bank of Nigeria should formulate a policy to establish knowledge management in the deposit money banks.
 Keywords: Deposit money banks, Profitability, Knowledge management strategies, Knowledge management

Public Expenditure Shocks and Human Capital Development in the Presence of Structural Breaks: Evidence from Nigeria

The study examines the impact of public expenditure shocks on human capital development in in the Presence of Structural Breaks: Evidence from Nigeria. The nature of this study necessitates the use of a time–series research design and an extensive reliance on secondary data sourced from the Central Bank of Nigeria (CBN) statistical bulletins, for the period 1981-2018. The method of data analysis utilized a battery of econometric applications often used in most contemporary economic time-series studies. First, the descriptive and correlation analysis is presented. After that the Augmented Dickey Fuller (ADF) unit root test and Zivot and Andrews Unit root for structural breaks is applied and this is followed by the co-integration test both with and without structural breaks. The Wald test for significance of the structural breaks was also employed and then the Variance Autoregressive (VAR) technique is then utilized. Finally, the impulse-response functions is conducted The study findings reveal that response of HCAP to innovations in HEXP is shown to exhibit oscillations over the period horizon with initial declines showing in the 1st quarter after the shock. An immediate rebound in HCAP response is observed beginning from the 2nd quarter after the shock and this positive rebound is sustained up to 10th quarter after the shock. However, one standard deviation shocks to EDEXP is seen to have immediate positive effects on HCAP lasting till 2-3 quarters after the shock and then followed by a decline sustained at a little below the baseline and declining further in the 7th quarter but again we see a slight rebound which reverts. On the overall, the shocks shows high potentials for asymptotic convergence and stability in HCAP. However, the response of HCAP to investment shocks is the most destabilizing. Furthermore, we observe that the impulse response functions are robust to structural breaks. The evidence of structural breaks reveals few instances of variations with the main analysis without breaks especially in relation the public expenditure. The result shows that, with the inclusion of breaks, the sustained positive effect in HCAP of a one standard deviation shock in HEXP is still observed and also sustained up to 10th quarter after the shock. Again just like in the case of no structural breaks, we also find that the shocks in EDEXP shows high potentials for asymptotic convergence and stability in the response of HCAP but in the case of investment, we find some differences in the response of HCAP comparing with and without structural breaks. The study recommends that need for government to ensure efficiency in public expenditures.

Response of Nigerian Construction Industry to Economic Growth

The study assessed response of Nigerian Construction Industry to economic growth of Nigeria. The research was conducted using secondary data. The secondary data used was the National Account Dataset from 1981 to 2018 as 2010 constant price year. This was gotten from the Central Bank of Nigeria (CBN) publication reports. The response was evaluated through Impact propensity (IP), Finite Distributed Lag (FDL) and the Long Run Propensity (LRP). These parameters were calculated from the time series regression analysis using ordinary Least Square Method of estimation. The results show that the impact propensity of economic growth on construction is weak with correlation coefficient of -0.012. Delayed impact of economic growth on construction was observed with finite distributed lag of two year cycle. Maximum correlation coefficient of 1.265 with the economics of the preceding year (t-1) was observed. Long run propensity of 1.333 establishes a high growth propensity for construction industry given a one percent permanent GDP growth. Therefore, the study concluded that a consistent economic growth is desirable so as to achieve improved construction industry contribution to GDP.

Challenges of accountability in Nigeria: the role of deposit money bank

PurposeThe unhealthy drive for deposit in the banking sector has pushed many banks into unethical practices, thereby resulting in high-level corruption cases in the banking sector. The purpose of this study is to investigate the short- and long-run linkages between bank net interest income and deposit liabilities interacted with corruption, to establish the influence of corruption in deposit mobilisation drive of banks in Nigeria. Also, the study analysed the causal relationship between selected bank variables and fraud.Design/methodology/approachThe study used quarterly data on selected variables from 1Q 1993 to 4Q 2017 sourced from Nigerian Deposit Insurance Corporation (NDIC) annual reports and Central Bank of Nigeria (CBN) Statistical Bulletin of various issues. Deposit Money Bank various deposit liabilities are interacted with a corruption index and used as the independent variables, while bank earnings serve as the dependent variable. Error Correction Model (ECM) and Engel Granger approach to co-integration technique were used to analyse the data.FindingsThe findings reveal that various bank deposit liabilities interacted with corruption index has a negative effect on bank profitability in the long run, though only corrupt fixed deposit is statistically significant at the 5 per cent significance level. Bank total asset, total loan and advances and fraud have a significant effect on bank profitability at 1 and 10 per cent significance level. The findings also reveal that banks profit from corrupt fixed deposit and demand deposit in the short run.Social implicationsTextOriginality/valueThe literature is awash with bank lending corruption and various institutional factors such as competition among banks, credit bureau and information sharing about borrowers, bank supervisory policies, loan loss provisioning, bank ownership structure and regulatory environment and anti-corruption measures. The aspect of deposit mobilisation and corruption has not been well researched in literature; this study, therefore, fills the gap in the literature by examining the extent deposit money banks contributed to corruption in Nigeria through their cutthroat deposit mobilisation drive.

Dynamic Interactions of Nigerian Stock Market and Macroeconomic Variables

This study investigated the Dynamic Interactions of Nigerian Stock Market and Macroeconomic Variables with annual data collected from the Central Bank of Nigeria, Nigerian Stock Exchange Fact Books and National Bureau of Statistics from 1985 to 2018. It was found that economic growth proxied by Growth Domestic product and Interest rate have positive and significant relationship with all share index within the period of study, while inflation exerts negative influence on All Share Index. It was also found that exchange rate has insignificant impact on All Share Index within the scope of the study. Consequently, the researchers are of the opinion among others that government and her regulatory bodies devise adequate measure to curtail inflation in Nigeria. Keywords : Nigeria Stock Market, All Share Index, Macroeconomic Variables, ARDL. DOI: 10.7176/RJFA/11-8-04 Publication date: April 30 th 2020

Response of Banks to Fiscal Policy Stimuli in Nigeria

This study went into much neglected area of research; relationship between fiscal policy instruments and performance of banks in Nigeria. Various finametric tools were used to analyze data collected from Nigerian Deposit Insurance Cooperation and Central Bank of Nigeria for period of 1989 to 2018 inclusive. Resounding empirical findings were made as follows; Bank performance is autoregressive. That suggests that performance of banks in the past cannot be predicting future bank performance. It was conspicuously observed that Capital Expenditure, Non-Oil Revenue and Domestic Debt have positive and significant relationship with bank performance, while Recurrent Expenditure Domestic Debt afterwards negatively and significantly impact bank performance. It was also found that fiscal policy variables (Capital Expenditure, Recurrent Expenditure, Non-Oil Revenue and Domestic Debt) significantly impact bank performance both in the short run and long run. Since fiscal policy variables are found to exert significant impact banks’ performance in Nigeria, the researchers suggests to Federal government of Nigeria as a matter of urgency reconsiders the operation of Treasury Single Account. It is the view of the researchers that the Treasury Single Account be operated through deposit money banks by domesticating various Ministries, Departments and Agencies (MDAs) account with the deposit money banks. Keywords : Bank Performance, Fiscal Policy, ARDL, Nigeria. DOI: 10.7176/RJFA/11-8-12 Publication date: April 30 th 2020

Impact of Government Expenditure on Economic Growth: Evidence from Nigeria

This study seeks to explain the impact of government expenditure on economic growth in Nigeria using time series data from 1970 – 2017. Secondary data were sourced from Central Bank of Nigeria and World Bank. The study applied a modified version of endogenous growth model using Autoregressive distributed lag model. The adopted model was fitted with six variables- capital stock, labour force, capital expenditure, recurrent expenditure, inflation and trade openness. The study employed ADF-unit root test, Phillips-Perron test and Pairwise Granger causality test. All the variables used were found to be integrated at first difference except labour and inflation and a stable long run equilibrium relationship exist between the dependent and independent variables. Empirical findings revealed that two variables: capital and recurrent are statistically significant and hence these are the significant variables in explaining the impact of government expenditure on economic growth. The Granger causality test demonstrates a unidirectional causality from government expenditure to economic growth, in validation of Keynesian theory. In line with above, the study recommends among others that: government should intensify effort to ensure resources are properly managed and invested in productive sectors so as to foster economic growth.

Tax Incentives and Investment Growth: The Nigerian Perspective

Tax Incentives and Investment Growth: the Nigeria perspective is aimed at determining the effect of tax incentives represented by corporate income tax rate and investment allowance on investment growth in Nigeria from 1985-2018. The study adopted Ex Post Facto Research Design and time-series data was used. Relevant secondary data for this study were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin, the National Bureau of Statistics (NBS) and the Federal Inland Revenue Service (FIRS). The study employed ordinary least square estimation and used regression analysis to test the relationship between Tax Incentives and investment growth in Nigeria. The study shows that tax incentive policy is positively and significantly related to gross fixed capital formation. The findings showed that tax incentives have positive impact on gross fixed capital formation. The findings showed that there is a degree of relationship between corporate income tax and gross fixed capital formation; and that there is degree of co-variability between investment allowance and gross fixed capital formation in Nigeria. The result also indicates that a higher company income tax rate is associated with lower private investment and slower gross fixed capital formation. The implication of this finding is that since tax incentives represented by company income tax allowance and investment allowance have positive and significant impact on gross fixed capital formation, policy reform in other factors that affect investment growth is needed also to complement these incentives so that a better result can be achieved.

A Statistical Assessment of Liquidity Management and Profitability in a Cross Section of Deposit Money Banks in Nigeria using Panel Analysis

The objective of this study was to examine the relationship between liquidity and profitability of deposit money banks in Nigeria using panel approach. The study made use of a sample size of ten deposit money banks in Nigeria. Data used for the study were sourced from the annual reports of the sampled firms and the statistical bulletin of the Central Bank of Nigeria ranging from 2006 to 2016. The liquidity indicators that were used were current ratio (current assets to current liabilities) (CRT), cash to total asset ratio (CTA), cash to total deposit ratio (CTD), liquid asset to total assets ratio (LATA), and loan to total deposit ratio (LTD), while return on assets (ROA) was used as proxy for profitability. A panel data regression model was specified and estimated. The empirical results showed that there was a positive and statistically significant relationship between cash to total asset (CTA) ratio and liquid asset to total assets (LATA) with profitability, and there was a negative but statistically significant relationship between cash to total deposit (CTD) ratio and profitability. It was also revealed that current ratio (CRT) and loan to total deposit (LTD) had a positive but statistically not significant relationship with profitability. It was recommended that the deposit money banks should not only focus on the profit maximization perception but also embrace methods that will certify effective and efficient liquidity management since its survival and sustainability depends on effective liquidity management and profitability. This will help to reduce the negative effects of the incidence of deficient and excessive liquidity.

Linkages between External Reserves and Economic Performance in Nigeria, 1981-2018: Bounds Test and ARDL Approaches

Aims: This study seeks to explore a two-way relationship between Nigeria’s economic performance, measured by the GDP, and her stock of foreign reserves over time.
 Study Design: It uses secondary data - documented time series of Nigeria’s gross domestic product (GDP) and foreign exchange reserves (FER) – collected from various volumes of the Central Bank of Nigeria (CBN) Statistical Bulletin. The annual time series data cover a period of 38 years, from 1981-2018.
 Methodology: The time series properties of the variables were verified using the Augmented Dickey-Fuller (ADF) unit roots’ test procedure. Also, the Bounds test technique was used to test for cointegration while the autoregressive distributed-lag (ARDL) and error correction models were estimated to analyze short- and long-run relationships between the variables. Relevant diagnostic tests were carried out to validate the resultant model estimates.
 Results: Results of unit roots’ test reveal both GDP and foreign reserves as I(1) series. Bounds test for the GDP model revealed an observed F-statistic (.421) that is less than the critical lower bound F-statistic (4.94) at P=.05 and cointegrating relationship was not confirmed. However, Bounds test for the foreign reserves revealed an observed F-statistic (6.445) lager than the critical upper bound F-statistic (5.73) at P=.05 and cointegration was established leading to specification of a long-run error correction model (ECM). Result of ARDL model estimation shows that only one-year-lag of GDP was significant (P=.05) and positive in explaining variations in the current GDP. Previous year’s values of both GDP and foreign reserves have positive influence on the long-run foreign exchange with over 81.8% explanatory power. The adjustment coefficient of the error correction equation is highly significant (P=.001) with the desired negative sign, implying that previous periods’ errors are correctable by adjustments in the subsequent periods, and convergence is attainable. Granger-Causality test result revealed a unidirectional causality that runs from GDP to the external reserves.
 Conclusion: The study establishes a long-run relationship between stock of foreign reserves and economic performance in Nigeria. The finding corroborates the view that a booming economy has the propensity to attract foreign direct investment thereby boosting the stock of the country’s foreign reserves. To attract more FDI in the critical sectors of the Nigerian economy, the government should create enabling and investment-friendly environment, implement policies and programmes capable of amplify ease-of-doing-business, and boost investors’ confidence in the economy.

Agricultural sector value chain and government policy in Nigeria: issues, challenges and prospects

PurposeThis paper systematically reviewed the contributions of the recent Nigerian government agricultural policies and the impacts on the agricultural value chain system in line with the structural transformation of the sector and the Nigeria's vision 20:2020. The study also suggest strategies to upgrading various segments of the agricultural value chain and argue that Nigeria's agricultural sector requires huge investments and innovative ideas to increase production and create value addition across the most profitable areas of the value chain.Design/methodology/approachThe authors systematically present evidences and data from the Central Bank of Nigeria (the apex monetary authority of Nigeria) and Nigerian Bureau of Statistics (oversees and publishes statistics for Nigeria) to estimate the impact of Government agricultural policies on the value chains system.FindingsThe study discovers that the various recent government policy interventions to tackle the austere challenges in the agricultural sector are yet to yield much significant solution. Given to the dwindling performance of the sector, the Nigerian agricultural value chain is somewhat affected with systemic and services gaps which underpin the market failures (missing markets and weak markets), although the agricultural value chain has the potential of triggering economic growth in a higher scale with a trickle-down effect to other sectors of the Nigerian economy.Practical implicationsOverall, the findings indicate strategies to upgrading the production and processing segments of the agricultural value chain and argues that Nigeria's agricultural sector requires huge investments and innovative ideas to increase production and create value addition across the most profitable areas of the value chain.Social implicationsThe study proves that enhancing value addition in the agricultural sector is imperative to achieving triple-benefits of increasing productivity by building resilient systems that leverage on finance opportunities, deepening economic inclusive growth and achieving great milestones.Originality/valueThis study is the first attempt to focus on agricultural value chain system in line with the structural transformation and the Nigeria's vision 20:2020.

Credit relevance after mandatory IFRS adoption in deposit money banks of Nigeria

PurposeCredit relevance of financial reporting can be influenced by change in financial reporting framework. This study aims to examine the effect of mandatory international financial reporting standards (IFRS) adoption on credit relevance quality of financial reporting of deposit money banks (DMBs) in Nigeria.Design/methodology/approachThis study uses difference-in-differences (D-in-D) design for its modelling. Panel data regression analysis based on the D-in-D model is used in analysing the data collected from secondary sources.FindingsThe findings of this study are that based on the D-in-D approach, there is a significant and positive effect of mandatory IFRS adoption on credit relevance quality of financial reporting of DMBs in Nigeria, and that there is also a significant difference in the credit relevance quality of financial reporting of mandatory adopting banks in the post-mandatory IFRS adoption period compared to pre-mandatory IFRS adoption period.Research limitations/implicationsTo the best of this study's review, there is inadequacy of literature within the credit relevance research in Nigeria. In the light of this, this study intends to fill the gap.Practical implicationsThis study is specifically important to regulatory authorities, both primary and secondary regulators. Specifically, this study has implications in the regulatory roles of Central Bank of Nigeria (CBN) and Financial Reporting Council of Nigeria (FRC). However, the study recommends that regulatory authorities should encourage DMBs to avail their financial reports annually to credit rating agencies (local and international) for proper evaluation for subsequent ratings.Originality/valueThe peculiarities in this study, that is the utilisation of the D-in-D design and the use of credit relevance metric as the dependent variable, made this study important and novel to push the frontier of existing knowledge.

Effect of Economic and Agricultural Diversification on the Economic Growth in Nigeria

The study examines the effect of economic and agricultural diversification on economic growth in Nigeria. The objectives were to determine the effect of government agricultural spending on Nigeria’s Gross Domestic Product. Data were collected from secondary sourced using the time series data which was extracted from the Central Bank of Nigeria (CBN) annual Statistical Bulletin for the period and The Nigeria Bureau of Statistic annual reports. Data were analyzed using the Autoregressive Distributed Lag (ARDL) approach or Bound Test Method. The findings revealed that Government agricultural expenditure does not have a significant effect on Gross Domestic Product. The investigation suggested that the government at all level should increase their budgetary allocations for agriculture and also develop a functional agricultural long-term blueprint to improve the sector.

Stock Market Activities and Economic Growth in Nigeria: A Cointegration Approach

Stock markets have been the main catalyst of economic growth in most economies. However, there are mix results on the exact nature of the influence of key stock market variables on economic growth in developing economies. Thus, this study examined the effect of stock market measures on economic growth in Nigeria. This paper employed an ex-post facto research design using annualized data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and Stock Exchange Fact books for the period 1985 to 2017 and they were analysed using the error correction estimate regression technique at 5% level of significance. The result ecm (-1) is statistically sign and significant, stock market activities such as market capitalization ( = 0.0386, p > 0.05), number of deals ( = 0.0487, p < 0.05) and All share Index ( = 0.0921, p < 0.05) have positive influence on economic growth, while volume of trading ( = -0.6110, p < 0.05) has a negative effect on economic growth. These results suggested that all the specified variables except market capitalization have significant effect on economic growth in Nigeria. The study concluded that stock market activities influence the economic growth in Nigeria. Therefore, it is recommended that investors should take the advantage of the numerous opportunities offered by the stock market while market makers and regulators should continue to operate according to best market practices in order to ensure confidence and continuous patronage by various economic agents.

The Effect of Monetary Policy on Foreign Trade in Nigeria

This research work investigated the impact of monetary policy on foreign trade in Nigeria during the period 1981 to 2017. The research made use of secondary data which are collected from the Central Bank of Nigeria, Statistical Bulletin (2017). The model obtained from the result represents a Error Correction Model (ECM) which relates the dependent variable (Net Import) to several predictor variables Money Supply, Interest Rate, Exchange Rate, Foreign Direct Investment and Trade Openness. From the findings of the study, the error correction term (speed of adjustment towards equilibrium) value of -0.53581 is significant at 5% and implies that there is a long run causality running from monetary policy activities measures of foreign trade. However, only all the variable was used in the study was significant at 5% level of significance. This implies that monetary policy in Nigeria has a positive influence on foreign trade within the period, except for interest rate that has a negative coefficient and not significant. In conclusion, these intermediate variables of monetary, the exchange rate arguably have a huge impact on the economy because of its effect on the value of local currency, domestic inflation, macroeconomic credibility, capital flows and financial stability. Increased exchange rate directly affects the prices of imported commodities and an increase in the price of imported goods and services contributes directly to increase in inflation. Based on the analysis, the study concluded that there is significance relationship between money supply and net import in Nigeria and also that there is relationship between foreign direct investment and net import in Nigeria. The study also shows that there is relationship between trade openness and net import in Nigeria.