Currency Redesign Attributes And Economic Performance In Nigeria (1960 – 2023)

Abstract

This study examined the effect of currency redesign attributes on economic performance in Nigeria, focusing on the roles of deposit growth rate (DGR), liquidity mop-up ratio (LMR), and consumer price index (CPI) from 1960 to 2023. Adopting an ex-post-facto research design, the study sampled ten currency redesign periods through stratified and random sampling techniques. Secondary data were sourced and analysed using normality tests, panel unit root tests, multicollinearity diagnostics, and Generalised Linear Model (GLM) regression. The model specified real gross domestic product (RGDP) and real exchange rate (RER) as proxies for economic performance. Results showed that all three independent variables: DGR, LMR, and CPI, exhibited negative relationships with RGDP, but none were statistically significant (p > 0.05). However, when RER was used as a control variable, only DGR showed a statistically significant negative effect (p = 0.0269), implying that rising deposit growth rate during currency redesign periods adversely affected exchange rate stability. The value relevance of the study was that currency redesign policies are theoretically sound for macroeconomic stability, their practical implementation may result in unintended economic disruptions due to poor planning, financial strain, and systemic inefficiencies. The study concludes that the economic impact of Nigeria’s currency redesign efforts has been largely negative and statistically weak. It recommends improved policy design, phased implementation, and ongoing evaluation mechanisms for future monetary reforms.