Abstract:
This study examined the impact of CBN monetary policy on informality in Nigeria over the period 1970-2011 using an ordinary least squares methodology. The results indicate that money supply impacts positively and significantly on informality; while other monetary variables such as minimum rediscount rate, exchange rate, inflation rate, and liquidity ratio do not impact significantly on informality in Nigeria. This finding implies that expansionary monetary policy that favours increased money supply in Nigeria encourages informality. The results further indicate that the burden of taxation and government regulatory activities in the economy are significant drivers of informality in Nigeria.
