Appraisal Of Monetary Policy Implementation In Nigerian Banks (A Case Study Of CBN)

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Appraisal Of Monetary Policy Implementation In Nigerian Banks (A Case Study Of CBN)


Table of Contents


  • Title page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of contents

Chapter One

1.0 Introduction

  • 1.1 Statement of the Problem
  • 1.2 Objectives of the Study
  • 1.3 Significance of The Study
  • 1.4 Definition of Terms.
  • 1.5 Limitation of The Study
  • 1.6 Plan of The Study

Chapter Two

2.0 Literature Review

  • 2.1 Conceptual Definition
  • 2.2 Monetary Policy in Nigeria
  • 2.3 Framework For Monetary Target In Nigeria
  • 2.4 Inflation Targeting
  • 2.5 The Rationale For Inflation Targeting
  • 2.6 Requirement For Inflation Targeting

Chapter Three

3.0 Research Methodology

  • 3.1 Sources of Data
  • 3.2 Population of the Study
  • 3.3 The Sampling Techniques

Chapter Four

4.0 Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Data Analysis

Chapter Five

5.0 Summary Conclusion and Recommendations

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendations
  • References

Chapter One


1.0 Introduction

An appraisal of the banking industry show that the industry is determined by several factors, but the most influencing of all is director factor of regulatory frame work, under which the industry operator. This framework can be divided into two broad aspects of monetary and banking.

In all economics, the conduct of both policies are normally. Originated through banking institution who play an international process, the role of bringing lender and borrows together. Though in this process, the central bank play a crucial role in determine the price of money therefore monetary policy is important by its own right from the past view of monetary economics and policy maker and in term of its impact on the economy.

Of all the tools available to the government for directing the course of economy, monetary policy has proven to be the most feasible instrument for achieving medium term stabilization objectives (CBN guideline 2003) monetary policy formulation and implement emerge on a critical government responsibility if the economy is not to be a strayed. Policy are not made for their own sake, they are directed toward achieving a desired goal over a period of time.

Generally the primary objective of monetary policies concern with the discretionary control of monetary supply by the monetary authority in order to achieve the stated economy goals. The government uses the macroeconomic stabilization policy which is broad term that embraces a target family of economic policies.

These polices are designed in an attempt to change the trend of some monetary valuable in particular direction so as to include the desired behavioral change in monetary policy. The banks role is to conduct appropriate monetary policy that is consistent with the main economic objective of achieving real growth in gross domestic product low inflation rate and a stable balance of payment position. This is irrespective of whether the direct or indirect approach is put in place to control money and credit.

In this regard the CBN determine the amount of money supply that is consistent and manipulates the monetary instruments, instrument at its disposal in order to achieve the stated objective because there is a belief that there is a relationship between the variable and monetary variable.


1.1 Statement of the Problem

  1. What rule did draconian sent into banking sector
  2. What roll did monetary authorities play in formulate policy guideline.
  3. How can economy grow without the banking sector?
  4. Why some policies been implemented by the commercial banks as stated by the CBN.

1.2 Objective of the Study

  1. To analyze various monetary policy instrument that have been previously used and the extent to which this have contributed to the development of banking sector in Nigeria.
  2. To examine the operation of commercial bank and find out if they have strictly adhere to regulation of monetary authorities (CBN).
  3. To draw conclusion and make policy recommendation base of finding from the study.

1.3 Significance of the Study

This study will be of great benefit to bankers policy makers, investment analyst and the private and public sector, Moreover it will be useful to policy make in an attempt to fashion out dynamic and reliable monetary policy measure for controlling commercial banks in their ability to create money there y influence the performance of the economy.

Also, this work will also add to the existing knowledge in banking professional.


1.4 Definition of the Terms

Brief definitions of the terms relevant to this highlighted below.

1. Monetary Policy:

This is concerned with the use of money supply and credit control to change macro-economic activities.

2. Discount Rate:

This is the rate of interest paid by banks to CBN when they borrow from them.

3. Research Requirement:

This is the function of commercial banks demand and time deposit that must be kept with the CBN.

4. Open Market operations:

It is the selling and buying of government and other eligible security by CBN in open market.

5. Special Deposit:

This means supplementary revenue that are used by CBN to reduce the volume of commercial banks liquidity.

6. Moral Suasion:

This involve the employment of persuasion or public pronouncement or outright appeals on the part of monetary authorities to the bank regulating to operate in a particular direction for the realization of specified objective.

7. Direct Credit Control:

This involves imposition of quantitative ceiling on the overall commercial banks credit y the CBN.

8. Monetary Target:

This is value that the monetary authorities shoot at in determining their appropriate policies.

9. Monetary People:

It simply the money stock of any moment in the economy on the other hand, it is defined as currency with the public and demand deposit with commercial bank.

10. Gross Domestic Products:

This measure the output produced factors of production in the domestic economy regardless it who own these factors within the nation.


1.5 Limitation of the Study

This work aim at examining the effect of monetary policy on the development of banking sector.

The problem encountered and the way forward. This study is restricted to the operation of monetary policy in Nigeria, between 1992 – 2008.


1.6 Plan of the Study

This research work consist of five chapters.

Chapter one of this research works is made up of the introduction the statement of the study the objective of the study, the significance of the study the limitation of the study, the definition of terms and the plan of the study.

Chapter three of this research work also includes research methodology.

Chapter four consists of data presentation and analysis.

Finally Chapter five of this research work includes summary conclusion and recommendation.


Chapter Five


5.0 Summary Conclusion and Recommendation

This chapter examines the economic development as regard monetary policy under the period reviewed. It also contains recommendation and conclusion of the further shows are where further researcher could be carried into. This researcher could be carried out. This chapter also considered how this worked can be used as step and guide in achieving further success in monetary policy in Nigeria.


5.1 Summary

This project has traced the formation of the Nigeria monetary policy and its performance since the 2007 provide the background reviewed to the study. It discussed to economic development as regard the monetary policy under the period reviewed. It highlighted policy under the period reviewed. It highlight of the Nigeria economy of the 2005 when there was important growth as a result of the oil boom and the expanding role of the public sector in the economic sector despite the family unimpressive economic problem such as growth fiscal deficit, external dis-equilibrium and inflationary pressure assumed more series dimension.

The problem of monetary policy were largely a carry over from the previous decade and the monetary control frame work based on direct instrument of government fiscal operation especially the increased financial deficit by the Central bank.

The study has focused on the effectiveness of monetary policy of the performance implementation in Nigeria Bank (CBN) and it has been discovered that factors such as deregulation, liberalization and inflation called effect. The performance of the bank in term of its profitability and efficiency. The chi-square method of analysis was employed to measure the banks profitability as regards to monetary policy instrument. It has clearly show from the previous chapter the relationship that exist between banks profits, bills discounted bank 9nvestment and loan and advance.
Where positive relationship exists between banks profit bills discounted and bank investment and negative relationship between profit of the bank and loans advance.


5.2 Conclusion

The general conclusion that emerge from this study is that monetary policy adopted during the period under review has been effective controlling the volume of commercial bank credit.

This is evident in the fact that our regression result reveals that monetary policies have significant effect on the performance of the banking sector of the economy.

The study reveals that the Central Bank of Nigeria (CBN) as apex bank has the authority over the performance of the banking sector through its policy instrument, hence the recent recapitalization policy of N25. Billion on commercial bank is a good example of elevating and energizing the performance of the banking sector to serve as path of development of the sector of economy.


5.3 Recommendations

From the observation and segment highlighted problem that may prevent the effectiveness or monetary policy, the following recommendation are made:

  1. For effective operation of monetary policy measure in the economy, the central bank of Nigeria should, be granted autonomy on the monetary functions. Partial should be replaced with full autonomy, for Central Bank is underdeveloped and developing countries are almost invariably subject to government interference.
  2. Regulatory role of the Central Bank of Nigeria should be flexible to encourage efficiency, financial discipline and completion among the banks.
  3. Although commercial banks and other financial stipulation have not fully comply with the stipulation prudential guideline of CBN it is within the power of the Central bank of Nigeria (CBN) and other financial authorities to persuade the banks to do so.

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