This project appraised the monetary policy of the Central Bank on the
commercial banks Nigeria.
Part of the statutory power of the Central Bank of Nigeria is to conduct the
activities of commercial bank in other to sustain a verily economy. However,
when monetary policy be implemented, the external reserves will maintained
safeguard the international value of the currency and promotes stable exchange
rate. The monetary instruments which the Central Bank of Nigeria used to
achieve these objectives are open market operation, moral suasion, reserve
requirement, special deposit, bank rate etc. which subsequently have a positive
impact on the economy. To authenticate the statement of fact that the Central
bank play an important role in the economy through the implementation of
monetary policy, a well structured questionnaire was presented at Wema Bank
Plc. The method of statistical analysis used in chi-square in conclusion, this
project appraises the role of the Central Bank of Nigeria on commercial banks
in Nigeria through a well implemented monetary policy with turn-over on
liquidity channel, credit channel, exchange rate mechanism etc.
TABLE OF CONTENT
Title page i
Table of content vi
1.1 Introduction 1
of problem 2
of the study 3
of the study 3
of the study 3
of terms 4-
Financial System 6
and Regulation of Nigeria
Financial System 7 -8
Regulation of the Financial System 8-10
2.3.1 Distress in Banking 11
2.3.2 Causes of Bank Distress 11
Historical Background and the Establishment of
Central Bank of Nigeria 11
and Development Function of Central
Bank of Nigeria 11
of Central Bank of Nigeria
2.6.1 Problem Confronting Central Bank of Nigeria in the
Management of Nigeria Economy. 16
Policy Formulation and Implementation 17
of Monetary Policy 19
of Monetary and Credit Policy Measure in Nigeria 20
3.0 Research methodology 21
3.1 Unit of Study 21
3.2 Research Instrument and Collection 21
3.3 Data Preparation and Organization 21
3.4 Limitation of the Study 22
3.5 Analysis of data
4.0 Data Analysis, Presentation and Interpretation 23
4.1 Administration of Questionnaire 23
4.2 Testing of Hypothesis 23
5.0 Summary, Conclusion and Recommendation 27
5.1 Summary 27
5.2 Recommendation 28
5.3 Conclusion 29
Managing an economy entails articulating well meaning strategies and
devising various polices and measures that ensure efficient utilization of
nation’s resources with a view to promoting economics growth and employment and
maintain domestic and external sector stability.
The role of the monetary on financial sector in promoting the rapid development
of the sector of the economy cannot be over-emphasized. Central Bank of Nigeria is the apex
of the economy’s financial system, shoulders increasing responsibility in
development not only a sound monetary and financial system, but also actively
advancing the development objective of the Federal Government. The Central Bank
has nurtured the financial institutions, promoted the money and capital markets
and improved the payment system.
In the conduct of monetary management, however, the Central bank of Nigeria faces
some challenges which include government fiscal operation over which the bank
has no control. The problem of excess liquidity and excessive expansion of bank
credit, and inadequate financial infrastructure in the adoption of indirect
approach (market based tools) of monetary control.
The issues of above become problems because the implementation of
monetary policy has failed to tackle the objective it is often used and those
Reduction in the level of unemployment
Reduction in the level of inflation
iii. The enhancement of rapid economic growth and economic
Increase in industrialization
The Central Bank of Nigeria
is therefore set up to coordinate and supervise Federal Government monetary
OF THE STUDY
The purpose of this study, therefore is to highlight the contribution of
the Central Bank of Nigeria
in the management of a economy in term of the performance of its functions with
emphasis on it’s monetary management role.
To examine how successful is the Federal Government and Central Bank of Nigeria, is
doing in their bids to control money in the economy. Must especially to check credit
creation of commercial banks.
In addition, it is the aim of this study to point out, how these polices
been adhere to by financial institutions such as commercial banks, merchant
banks and non-banking institutions. S
Furthermore, it is the aim of the study to identify the process involved
in the formulation and implementation of these policies.
OF THE STUDY
It is against this backdrop that a deliberate research effort in the Nigeria
macro-economic environment has become very relevant.
It is hoped that the research findings will provide valuable guide to the
managers of the Nigeria
economy regarding the application of the relevant policy measures for more
effective and greater result. It is hoped that the research findings will be
relevant to the following sub-sector of the economy.
Federal Government: It will be benefits
to the Federal Government if an appropriate policy is put in place towards
achieving the desire result. This is the desire to check mate the rate of
inflation in the economy through various monetary policy.
Banking Sector: The research finding is
of importance to the banking sector to adjust the level of efficiency in
banking operation bearing in mind the development role expected of the sector
in the move to correct all imbalances with in the nations economic system. the
sector will also benefit through the provision of information and data from the
Public Sector: The research findings
would be of benefit to this sector by allowing a review into the operation of
the sector. As efficient utilization of various instruments of the policy would
bring improved economy changed with high level performance and hence, increase
in productivity within the sector with resultant effect of improved standard of
living for the entire populace.
Private Sector: The fining where well
utilized will bring about efficient implementation
of the various policies tools and would come inform of adjusted price of raw
materials for production. Leading to over all reduction in the cost of
production. Leading to over all reduction in the cost of production through
elimination of or reduction in the inflationary rate would eventually result in
efficient utilization of the resources in the private sector and this would
bring about improved economy.
SCOPE OF THE STUDY
The write-up restricted to describe in general the Nigeria
financial system with special emphasis on Central Bank of Nigeria.
The study reveals the historical background of the Central Bank of Nigeria and its
establishment and more importantly the concept of the Central Bank of Nigeria. It
also shows the definition of the Central bank of Nigeria, not only that, it’s
objectives and functions with responsibility. The Central Bank of Nigeria present
predicament was discussed and special recommendations in minimizing and or
eliminating these problems was shown.
It will be importance to define some key worlds in this project for the
benefit of non-financial student who might need to read this project for a
purpose and in ability to have a clear meaning of some of the following words
may be incapacitated to make any meaningful decision.
Monetary Policy: These are policies
usually exercised by the Central Bank on behalf of the Federal Government. They
have as their targets, the quantity of money in the economy, the cost and
direction of credits.
Central Bank of Nigeria: Is the government
banker, receiving and holding revenue collected on behalf of the federal
government. It holds the government banking business both internally and
externally, it holds the balance or reserve of other commercial banks.
Fiscal Policy: These are government
policies that are normally affected through manipulation of government revenue and
expenditure. They are basically in the nature of tabulation, government
expenditure, direct government investment, subsidy etc.
Bank Rate: It is the rate which the
Central Bank lends money to banks, discount houses and other financial institutions
and since their lending is usually through rediscounting of bills, the bank
rate is also called the re-discount rate.
Open Market Operation: It means the buying
and selling of government bonds, treasury bills and other securities in the
open market (i.e. to individuals, commercial banks, and other interested
Treasury Bills: Is the main operational
instrument of open market operation, it is gilf-edge security with higher
degree of safety which make it attractive to investors. It also enjoys trustee
and liquidity status.
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