This study analyzed how the CBN monetary policy rate affects private sector expansion and investment patterns in Nigeria from 1984 24. A unit root test was conducted to check for stationarity and the best estimation technique for the study. Based on the ADF and PPR tests, it was found that the variables had mixed order of integration. This study examines the impact of Nigeria’s monetary policy on private sector expansion and investment patterns from 1984 to 2024. This study arose from the need to understand why massive credit expansions have not always translated into significant physical investment. Using the Augmented Dickey-Fuller (ADF) and Phillip-Perron tests, the variables were found to be a mix of I (0) and I (1), justifying the use of the ARDL framework. The findings reveal that in the short run, M2 is the most significant driver of private sector credit (CPS), with a 1% increase in M2 leading to a 0.78% expansion in credit. However, the MPR showed a negative but less significant impact, indicating that liquidity matters more than interest rates for Nigerian banks. For investment patterns (GFCF), the results show a "wait-and-see" effect, where physical investment positively reacts to GDP growth only after a one-to-two-year lag. Additionally, inflation was found to have a significant negative impact on investment, creating uncertainty for long-term projects. Diagnostic tests, including CUSUM and Jarque-Bera, confirmed that the models are stable and the residuals are normally distributed. The study concludes that while monetary policy effectively drives bank credit, a stable macroeconomic environment and consistent growth are required to trigger physical investment. The study recommends that the Central Bank of Nigeria prioritize liquidity management and price stability, while the federal government ensures policy consistency to build investor confidence
Okereke et al. (2026) studied this question.