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Mathematics
MODELING AND FORECASTING OF MONTHLY BANKS CASH RESERVES IN NIGERIA OVER PERIODS OF JANUARY 2000 TO DECEMBER 2016
A. A. Adewara and O. I. Adeniyi
Banks reserve is one of the monetary policies of the Central Bank of Nigeria (CBN) in other to monitor and regulate the monetary activities of all the recognized commercial banks in Nigeria. This study examines these monthly banks cash reserves in Naira from January 2000 to December 2016 with the aim to use the model developed to forecast monthly banks cash reserves for January 2017 to December 2017 in Nigeria. The results shows that an Autoregressive Integrated Moving Average (ARIMA) of order (0, 1, 1) with the value of AIC = 5520.474, AICc=5520.534 and BIC = 5523.792 gives the best ARIMA model. The time plot of predicted CBN banks cash reserves shows that there will be continuous increase in CBN monthly banks cash reserves which will follow a linear trend from January 2017 to December 2017. The study concludes that more money will be kept at the Central Bank of Nigeria by our commercial banks as cash reserves for proper monitoring of their financial and monetary activities.
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