IMPACT OF MONETARY POLICY ON THE GROWTH OF SMALL-SCALE BUSINESS IN NIGERIA (1999-2022)
Abstract
This study examined the impact of monetary policy on the growth of small-scale businesses in Nigeria
between 1999 and 2022. The research was motivated by the critical role small-scale enterprises played in
driving economic development and reducing unemployment, as well as the need to understand how
monetary policy tools influenced their performance. Using annual time series data sourced from the
Central Bank of Nigeria (CBN) and the National Bureau of Statistics (NBS), the study employed the
Autoregressive Distributed Lag (ARDL) model to investigate both the short-run and long-run effects of
monetary policy indicators—namely interest rate, inflation rate, and money supply—on small business
growth, proxied by the contribution of SMEs to GDP. The findings revealed that monetary policy had a
significant effect on small-scale business growth, with interest rates and inflation showing a negative
impact, while money supply contributed positively. The results suggested that a stable and well-managed
monetary policy framework was crucial for fostering the growth of small businesses in Nigeria. The study
recommended that policymakers ensure consistency and flexibility in monetary policy to create a
conducive environment for small-scale enterprises to thrive
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