MONEY SUPPLY AND POVERTY NEXUS IN NIGERIA: AN EMPERICAL INVESTIGATION

This study investigates the nexus between money supply and poverty in Nigeria from 1990 to 2025. The objective is to determine both the long-run and short-run relationship between broad money supply M2, inflation, GDP growth, unemployment, and poverty rate. The study is motivated by the persistent rise in poverty despite repeated monetary expansion by the Central Bank of Nigeria. Secondary annual data were sourced from the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics. The Autoregressive Distributed Lag bounds testing approach was employed to estimate the relationship, preceded by unit root tests to confirm the order of integration. The findings reveal a long-run cointegrating relationship among the variables. Money supply has a positive and statistically significant effect on poverty in the long run, indicating that monetary expansion increases poverty through inflationary channels. Inflation and unemployment also exert positive effects on poverty, while GDP growth reduces it. The error correction term is negative and significant, showing a 64% annual speed of adjustment to long-run equilibrium. Diagnostic tests confirm that the model is free from serial correlation, heteroscedasticity, and instability. The study concludes that money supply expansion in Nigeria has not translated into poverty reduction due to supply-side rigidities and persistent inflation. It recommends that the Central Bank prioritize inflation targeting, coordinate monetary policy with fiscal measures, and improve credit access to the real sector to achieve poverty reduction.