IMPACT OF MONETARY POLICY ON SAVINGS MOBILIZATION IN NIGERIA, 1990-2024

Abstract This study examined the impact of monetary policy on savings mobilization in Nigeria from 1990 to 2024, focusing on how key monetary policy tools monetary policy rate (MPR), exchange rate (EXR), and inflation rate (INF) affect Savings mobilization. Using time series data, the study employs Ordinary Least Squares (OLS) regression analysis to explore these relationships. The findings revealed significant negative impacts of MPR and INF on Savings mobilization, aligning with economic theory that higher interest rates and inflation deter savings mobilization. Conversely, a depreciating exchange rate positively influences savings mobilization, suggesting that currency depreciation makes investments cheaper for domestic and foreign capital. However, excessive exchange rate volatility undermines these benefits, as it creates uncertainty. The study highlighted that while controlling inflation is essential, maintaining stable interest rates and exchange rates is equally important to foster a favourable savings mobilization climate. It concludes that a balanced monetary policy approach, aimed at controlling inflation while ensuring investment-friendly conditions, is crucial. Additionally, it recommends that Nigeria implement a managed float system for exchange rates and adopt inflation-targeting policies. Long-term structural reforms, such as improving infrastructure and governance, are also suggested to complement these monetary adjustments. This comprehensive approach will enhance Nigeria’s attractiveness to domestic and foreign investors, supporting sustained savings mobilization.