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ISSN : 2456-3676

Title:
AN ECONOMIC ANALYSIS OF MONETARY POLICY AND DEPOSIT MONEY BANKS IN NIGERIA

Authors:
Monogbe Tunde G and Okah O. John, Nigeria

Abstract:
This study seek to examine how change in government monetary policy affect bank performance in Nigeria. Some pragmatic monetary policy indices which includes liquidity ratio, cash reserve ratio, monetary policy rate and total money supply were considered. The study employed a preliminary analysis of descriptive statistics while granger causality test was used in testing the formulated hypothesis. Findings reveals the existence of unidirectional relationship between cash reserve ratio and bank loan and advances with causality flowing from cash reserve ratio to bank loan and advances. This therefore suggest that rise in cash reserve ratio is capable of stimulating bank loan and advances. Secondly, the study report the existence of unidirectional association between bank loan and advances and monetary policy rate with causality flowing from bank loan and advances to monetary policy rate. Hence, this study conclude that bank credit is more responsive to cash reserve ratio and monetary policy rate while liquidity ratio and total money supply seems to be repulsive to bank credit. The study therefore recommend that monetary policy committees are advice to review her policies to ensure a symbiotic relationship between her policy and commercial bank performance in Nigeria.

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