The Role of Monetary Policy in Mitigating Financial Market Volatility in Nigeria

Authors

  • Henry Onoriode College of Education, Mosogar, Delta state; Nigeria
  • Umunna Godson Nwagu University of Nigeria, Nsukka, Nigeria
  • Maryrita Nnenna Akah University of Nigeria, Nsukka, Nigeria

DOI:

https://doi.org/10.14276/2285-0430.4788

Keywords:

Financial markets, Capital market, Money market, Monetary policy, Volatility

Abstract

This study investigated the role of monetary policy in mitigating financial market volatility using monthly data from January 1990 to December 2022 and adopted the Exponential Generalized Autoregressive Conditional Heteroscedasticity (EGARCH) model. The study categorized the financial market into the capital market and the money market. Utilizing the Johansen cointegration method, the study found a long-run relationship between the variables. Based on the EGARCH results, it was determined that monetary policy, represented by money supply and the monetary policy rate, has a negative correlation with the capital market and a positive correlation with the money market. These findings indicate that monetary policy does not mitigate volatility in the capital market but rather affects the money market. Furthermore, the study revealed that monetary policy can either increase or decrease financial market volatility. Consequently, the study recommends that monetary authorities exercise caution in the indiscriminate application of policy instruments, as substantial evidence suggests that the use of monetary policy tools significantly impacts the performance of financial markets.

Author Biographies

Henry Onoriode, College of Education, Mosogar, Delta state; Nigeria

Senior lecturer in the Economics Department at Delta State College of Education Mosogar. He obtained his B.Sc. in Economics and Statistics from the University of Benin in 2000, an M.Sc. in Economics from Benson Idahosa University in 2015, and a Ph.D. in Development Economics from Nnamdi Azikiwe University in 2024. He started his career at Delta State College in 2004 as an Administrative Officer, later becoming Senior Assistant Registrar before moving into academia. Dr. Onoriode has served as Director of the Center for Entrepreneurship Studies and Development and is currently the Director of Consultancy Services at the college. He has authored and co-authored many articles in reputable journals. 

Umunna Godson Nwagu, University of Nigeria, Nsukka, Nigeria

Holds a Bachelor's degree in Education Economics, a postgraduate diploma in Economics, and a Master's degree in Quantitative Economics, all from the University of Nigeria, Nsukka. He completed his Doctorate in Monetary Economics at Nnamdi Azikiwe University, Awka, also located in Nigeria. Furthermore, he possesses a professional certificate in Accounting from the Institute of Cost and Management Accountants. His research interests include Monetary Economics, Quantitative Economics, Finance, Development Economics, Health Economics, and Public Finance Economics. Dr. Godson has significant experience in teaching and supervising a multitude of students in these disciplines, has authored articles in academic journals, and has engaged in both local and international conferences. Currently, he serves as a senior researcher at the University of Nigeria, Nsukka, and is a lecturer at Maduka University, Ekwegbe-Nsukka, Nigeria, where he teaches Macroeconomics, Monetary Economics, Mathematics Economics, and Econometrics.

Maryrita Nnenna Akah , University of Nigeria, Nsukka, Nigeria

Earned her Bachelor’s degree in Business Education (Accounting Option) from Madonna University, Okija, Nigeria, and a Master’s degree in Entrepreneurship Education from the University of Nigeria, Nsukka. She also holds a Doctorate in Entrepreneurship Education from the same university. Currently, she serves as a lecturer at Maduka University, Ekwegbe-Nsukka, Nigeria, where she teaches Entrepreneurship and Management. Additionally, she works as a research assistant at the University of Nigeria, Nsukka, and has contributed several articles to both local and international journals. Her research interests encompass Entrepreneurship, Management, Economics, Economic Empowerment and job creation, women and youth entrepreneurship, business development and sustainability, leadership and organizational behavior, as well as innovation and creativity in business.

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Published

10.08.2025

How to Cite

Onoriode, H., Nwagu, U. G., & Akah , M. N. (2025). The Role of Monetary Policy in Mitigating Financial Market Volatility in Nigeria. International Journal of Economic Behavior (IJEB), 15(1), 149–167. https://doi.org/10.14276/2285-0430.4788

Issue

Vol. 15 No. 1 (2025): International Journal of Economic Behavior

Section

Articles

License

Copyright (c) 2025 Henry Onoriode, Umunna Godson Nwagu, Maryrita Nnenna Akah

Creative Commons License

This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

L'opera è pubblicata sotto Licenza Creative Commons -CC Attribution-ShareAlike 4.0

Received 2024-11-19
Accepted 2025-08-02
Published 2025-08-10