Abstract:
Manufacturing sector output has been experiencing dwindling output over the years, despite the efforts by
the monetary authorities. Manufacturing sector in any economy is seen as one of the drivers of
industrialization and economic development, as such government policies affect their performance. Hence,
this paper examined the asymmetric effect of monetary policy tools on Nigeria’s manufacturing sector
output between 1986 and 2022. Non-linear Auto regressive Distributed Lag (NARDL) method was adopted
in carrying out empirical analysis. Cointegration using bounds test revealed the variables have long-run
relationship. Findings from the paper revealed that positive effect of private sector credit has a
corresponding positive impact on manufacturing sector output. While the negative effect led to a decrease in
the output. Further findings showed that positive effect of monetary policy rate led to an increase in
manufacturing sector output; while the negative effect led to a decrease in manufacturing sector output.
Both variables were found to have statistically insignificant relationship with manufacturing sector output in
Nigeria during the period covered. Based on these findings, the monetary authorities are encouraged to
continue with improving programmes or schemes that will lead to more funding for the manufacturing; and
are encouraged to take into account monetary policy that captures the economic reality on the ground.
