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Monetary Policy Effects on Private Sector Investment: Evidence from Sierra Leone

Author

Listed:
  • Sesay Brima

    (Doctoral Student in Industrial Economics, School of Economics, Wuhan University of Technology, Wuhan 430070, People's Republic of China)

  • Abdulai Salia Brima

    (Department of Economics and Commerce, Fourah Bay College, University of Sierra Leone, Sierra Leone.)

Abstract

Private sector investment has become an increasingly significant objective for the government of Sierra Leone in promoting economic growth and enhancing job creation, and monetary policy has always been one of the main economic management tools that governments use to shape economic performance. The study therefore examines the rate at which changes in monetary policy in Sierra Leone has affected the behavior of private sector investments, theories and empirical studies are reviewed in a way to identify a suitable model for private sector investment for the period 1980-2014. Using recent econometric techniques, the results suggest that money supply and gross domestic saving exert positive and statistically significant effect on private sector investments whereas treasury bill rate, inflation and gross domestic debt exert a negative effect. An important policy implication emerging from this study is to facilitate the establishment of financial institutions to increase credit delivery to the private sector so as to enhance private investment.

Suggested Citation

  • Sesay Brima & Abdulai Salia Brima, 2017. "Monetary Policy Effects on Private Sector Investment: Evidence from Sierra Leone," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 476-488.
    • Handle: RePEc:eco:journ1:2017-01-61
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    References listed on IDEAS

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    Cited by:

    1. Khadija Essalhi & Salah Eddine, 2023. "The Impact of Monetary Policy on Private Investment in Morocco: An Analysis Using a VECM Model [L'impact de la politique monétaire sur l'investissement privé au Maroc : une analyse à l'aide d'un mo," Post-Print hal-04303914, HAL.
    2. Vikela Liso Sithole & Tembeka Ndlwana & Kin Sibanda, 2021. "The Relationship between Monetary Policy and Private Sector Credit in SADC Countries," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 9(1), pages 46-54.
    3. Thuy T. Dang & Anh D. Pham & Diem N. Tran, 2020. "Impact of Monetary Policy on Private Investment: Evidence from Vietnam’s Provincial Data," Economies, MDPI, vol. 8(3), pages 1-15, September.

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    More about this item

    Keywords

    Monetary Policy; Private Sector Investment; Sierra Leone;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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