ABSTRACT
This study examines the effect of monetary policy on commercial bank performance for the period of fifteen (15) years (2001 to 2016). It specifically examine the trend of banking sector performance (measured by credit demand and credit supply); analyze the impact of monetary policy channels on performance of banking sector in Nigeria and also examine the response of monetary policy instruments in the banking industry on banking sector performance.
The study built econometric model to evaluate the moderating effect of the dependent variable (Deposit Liability) on the independent variable (Deposit rate, Exchange rate and Minimum Discount rate). Time series data obtained from Central Bank of Nigeria (CBN) statistical Bulletin, Annual Report and Statement of Accounts from 2001 to 2016 were used for the study. This study used ordinary least square method (OLS) techniques because it is the best linear unbiased estimator (BLUE) to achieve objective two. In order to achieve objective three, the study used impulse response while the study employed the use of graph to achieve objective one.
The result from analysis of the analysis using graph showed there is a significant transitional trend of deposit rate, exchange rate minimum discount rate and deposit liability within the period study, though minimum discount rate was constant for a period of 9 years (2007-2016). The ordinary least square estimation showed that the coefficients exchange rate and deposit rate are statistically significant under a 5% level of significance as indicated by low P-values (0.0055 & 0.0004 respectively). The other coefficients minimum discount rate is not statistically significant as indicated by their high probability values (0.1565).
The study concluded that while minimum discount rate exert negative response on growth rate, exchange rate and deposit liability exert a positive response to the growth rate. It was recommended that effective and sustainable monetary policy capable of ensuring growth and development in the banking sectors should be adopted; In addition to effective deposit rate, incentives should be given to the public in form of higher interest on deposit in order to encourage and mobilize more funds from the public.
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of Research Problem
1.3 Research Questions
1.4 Objectives of the Study
1.5 Research Hypothesis
1.6 Justification of Study
1.7 Scope of the Study
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
2.1 Conceptual Review
2.1.1 Monetary policies in Kenya
2.1.2 A Review of the Structure of Nigeria’s Monetary
2.1.3 The Re-Capitalization Policy and the Banking Sector Performance in Nigeria
2.1.4 Monetary Policy Appraisal in Nigeria
2.1.5 The UK Monetary Policy Framework
2.1.6 Concept of Monetary Policy
2.2 Theoretical Review
2.2.1 Loan Pricing Theory
2.2.2 Credit Market Theory
2.2.3 Loanable Fund Theory
2.3 Empirical review
CHAPTER THREE: METHODOLOGY
3.1 Theoretical Framework
3.2 Model Specification
3.3 Apriori Expectations
3.4 Sources of Data
3.5 Methods of Analysis
CHAPTER FOUR: RESULTS
4.1 Trend of Banking Sector Performance in Nigeria from 2001 to 2016
4.2 Impact of Monetary Policy Channel on Banking Sector Performance in Nigeria
4.3 Response of Monetary Policy Instrument to Banking Performance
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary
5.2 Conclusion
5.3 Recommendations
REFERENCES
APPENDIX
