Abstract
Monetary policy is
measures designed by the central authority to regulate the quality of money in
circulations. This study is on the effect of monetary policy on the banking
industry. The objective of the study is to determine the effect of monetary
policy on the commercial bank and its effectiveness especially in controlling
the quality of money in circulation.
Based on the finding, the researcher recommend among other that the
regulatory should make sure that the banks adhere to the monetary policies, so
that sanity will be maintained in the banking industry and confidence restored.
TABLE OF CONTENT
Title page – – –
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i
Approved page – –
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ii
Dedication
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iii
Acknowledgement
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Abstract – –
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CHAPTER ONE
INTRODUTION
Monetary policy constitutes the major policy thrust of the
government in the realization of various macro economic objectives. It is
refers to the combination of discretionary measures designed to regulate the
control the money supply in an economy by the monetary authorities with a view
of achieving stated or desired macro- economics goals.
The monetary
policies are designed to influence the behavior of the monetary sector. This is
because change in the behavior of the monetary sector influence various
monetary variable or aggregate. The monetary policy enforces at any point in
time affect the level of money supply either by expanding it or through
contraction of same. It influences the level of and structure of interest rates
and thus cost of funds in the the market, depending on the prevailing economic
to condition.
The regulation and
control of the volume and piece of money is called discretionary control of
money: discretionary in the sense that it is made act the instance bank of
Nigeria (CBN) has the responsibility of controlling money and credit in the
economy in order to check inflationary and deflationary pressure. As the apex
monetary authority, has the duty of ensuring that polices are set in motion to
regulate the financial sector so as to operate in the same direction with the
real sector in order to realize national economic objective.
Sector 2(c) of CBN
Decree 24 of 1991 as amended stated that one of the principle object of the
bank (CBN) shall be “to promote monetary stability and a sound financial system
in Nigeria “. While part v section 3 (a) of the same degree produce that the
bank (CBN) shall power to carry out open market operations for the purpose of
maintaining monetary stability in the economy of the country and without
prejudice to the generality of the foregoing, the bank may also for that
purpose issue sell, repurchase, amortize or redeem securities to be known as
stabilization securities (which shall constitute it obligation) and the
securities shall be issue at such rate of interest and under such condition of
maturity, amortization , negotiability and redemption as the bank may deem
appropriate”.
Moreover, these
polices issued by the central banks are targeted toward the control of the
commercial banks and the commercial banks who mobilize these funds from
individual depositor. Sometimes are restricted by the polices from engaging in
some activities through shift of the of the monetary policy and that can affect
the bank.
1.1 BACKGROUND OF
THE STUDY
Monetary polices has
central role in macro-economics managements, primary because of the close
relationship between the monetary aggregates and economic activities. This is
time irrespective of whether one considering the monetarist or Keynesian
framework.
The monetary
framework of an economy is definitely a scientific device but its application
appears to be more of an art in practice , many factor other the logic of the
theoretical framework, comes into play, some of the key determinant of the
types of monetary management.
The central bank
derivable to introduce some monetary instrument, this fact should be born in
mind as we as the subject of monetary policy impact on the financial sector of
Nigeria central bank.