Credit Supply Shocks and Macroeconomics Dynamics in Nigeria

The impact of credit supply shocks on macroeconomic dynamics have generated a lot of interest among macroeconomist over the years. This study investigates the response of real gross domestic product, monetary policy rate and consumer price index to shocks in credit supply in Nigeria. Quarterly data ranging from 1984 to 2022 was employed to estimate the specified model. An unrestricted VAR model was employed to capture the objectives of the study and the resulting impulse response was calibrated. Evidence from the impulse response indicate that shocks to credit supply negatively affects real GDP in Nigeria when observed across 10 quarters. It however, leads to positive changes in the consumer price index in the same time period. On the other hand we observe that monetary policy rate reacts positively to shocks in credit supply