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Monetary Policy and Small and Medium Enterprises’ Performance in Selected West African Countries

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Abstract

The study focussed on the effect of monetary policy on the performance of Small and Medium Enterprises (SMEs) in three West African countries, Nigeria, Ghana and Gambia over the period of 1981 to 2016. Variables like credit to the private sector, interest rate, inflation rate and exchange rate were employed as explanatory variables, while SMEs output was employed as dependent variable. It was observed that credit to the private sector and inflation rate have negative effect on SMEs output, while exchange rate and interest rate have negative effect on SMEs output over the period. Among all the monetary policy indicators, only interest rate had direct impact on the performance of SMEs in Ghana while exchange rate reported positive impact on SMEs output in Gambia. Consequently, it is concluded that monetary policy in the three countries had not been favourable to the performance of the SMEs sector in West African countries.

Suggested Citation

  • W.A. Isola & E.P. Mesagan, 2018. "Monetary Policy and Small and Medium Enterprises’ Performance in Selected West African Countries," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 21(69), pages 14-23, September.
    • Handle: RePEc:rej:journl:v:21:y:2018:i:69:p:14-23
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    References listed on IDEAS

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    2. Frederic S. Mishkin, 2007. "Housing and the monetary transmission mechanism," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 359-413.
    3. Sievers, Merten & Vandenberg, Paul, 2007. "Synergies through Linkages: Who Benefits from Linking Micro-Finance and Business Development Services?," World Development, Elsevier, vol. 35(8), pages 1341-1358, August.
    4. Tasneem Alam & Muhammad Waheed, 2006. "Sectoral Effects of Monetary Policy: Evidence from Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 1103-1115.
    5. Leippold, Markus & Vanini, Paolo & Ebnoether, Silvan, 2006. "Optimal credit limit management under different information regimes," Journal of Banking & Finance, Elsevier, vol. 30(2), pages 463-487, February.
    6. Kwaku D, Kessey, 2014. "Micro Credit and Promotion of Small and Medium Enterprises in Informal Sector of Ghana: Lessons from Experience," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(6), pages 768-780, June.
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    Cited by:

    1. Ekundayo P. Mesagan & Ismaila A. Yusuf, 2019. "Economic Stabilisation and Performance in West Africa: The Role of Fiscal and Monetary Policy," Working Papers of the African Governance and Development Institute. 19/097, African Governance and Development Institute..
    2. Isaac Azubuike Ogbuji & Ekundayo Peter Mesagan & Yasiru Olorunfemi Alimi, 2020. "The Dynamic Linkage between Money Market, Capital Market and Economic Growth in Ghana: New Lessons Relearned," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 5(2), pages 59-78, December.
    3. Ekundayo Peter Mesagan & Xuan Vinh Vo & Precious Muhammed Emmanuel, 2023. "The technological role in the growth-enhancing financial development: evidence from African nations," Economic Change and Restructuring, Springer, vol. 56(1), pages 657-680, February.
    4. Yusuf, Ismaila Akanni & Salaudeen, Mohammed Bashir & Agbonrofo, Hope, 2021. "Social and Economic Drivers of Stock Market Performance in Nigeria," MPRA Paper 111086, University Library of Munich, Germany.
    5. Ismaila Akanni Yusuf & Mohammed Bashir Salaudeen & Isaac Azubuike Ogbuji, 2022. "Exchange Rate Fluctuation and Inflation Nexus in Nigeria: The Case of Recent Recession," Journal of Economic Impact, Science Impact Publishers, vol. 4(1), pages 81-87.
    6. Ismaila Akanni Yusuf & Mohammed Bashir Salaudeen & Hope Agbonrofo, 2021. "Social and Economic Drivers of Stock Market Performance in Nigeria," Journal of Economic Impact, Science Impact Publishers, vol. 3(3), pages 137-143.
    7. Yusuf, Ismaila Akanni & Mesagan, Ekundayo Peter & Amadi, Agatha Nkem, 2020. "Effect of financial deepening on stock market returns: The case of military and democratic post-SAP regimes in Nigeria," BizEcons Quarterly, Strides Educational Foundation, vol. 6, pages 3-21.

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    More about this item

    Keywords

    Monetary policy; SMEs Output; Private Sector; West Africa.;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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