TABLE OF CONTENTS
Cover page
Title page
Approval page
Dedication
Acknowledgement
Table of contents
CHAPTER ONE
Introduction
1.1
Back
ground of the study
1.2
Statement
of the problem
1.3
Objective
of study
1.4
Research
hypothesis
1.5
Significance
of the study
1.6
Scope
and limitation of the study
1.7
Definition
of term.
CHAPTER TWO
Literature review
2.1
Definition
of monetary policy
2.2
Economic
stabilization
2.3
The
major monetary policy instrument utilized by various government in Nigeria
2.4
Economic
monetary objectives
2.5
Analysis
of monetary policy objective/ economic indicators
2.6
Tools
for monetary policy
2.7
The
limitation of monetary policy in Nigeria 0
CHAPTER THREE
Research design and methodology
3.1
Research
design
3.2
Sources
of data
3.3
Data
collection method
3.4
Treatment
and analysis of data
3.5
Statement
of null alternative hypothesis
CHAPTER FOUR
Presentation interpretation and
analyses of data
4.1
Data
presentation and analysis
4.2
Hypothesis
testing and proving
4.3
Discussion
CHAPTER FIVE
Summary of finding conclusion and
recommendation
5.1
Summary
of findings
5.2
Recommendation
5.3
Conclusion
Bibliography
Appendix I
Appendix II
Questionnaire
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Monetary policy
usually involve the expansion or contraction of money supply the manipulation
of interest rates to make borrowing easier and cheaper or more difficult and deicer depending an prevailing economic
condition and challenging of fund to
growth sector for increased output. Monetary policy is an integral part of the
overall economic policy that regulate the level of money or liquidity in the
economy in order achieve some desired policy objective.
Monetary policy
is usually the responsibility of the monetary authorities which comprises the
central bank and the federal government.
In Nigeria the central bank exercise primary responsibilities for
initiating articulating implementing and appraising such policy the banks proposal
are subject to ratification by the federal governments.
Monetary
policy measures are monetary management
techniques put in place by the government through the central bank. These
measures relay on the control of money stock that is supply of money in order
to influence broad economic objective which include price stability high level
of employment sustainable economic growth and a balance of payment equilibrium
these bread objectives are achieved through the use of appropriate instruments
depending on which objective the policy formulates want to achieve and also in
the level of development of the economy.
In the
application of monetary policy measures as instrument of economic stabilization
and instrument of monetary policy are determined by the nature of the problems
to the solved and by the environment in
which these problems exist.
There are
broadly two categories of these instruments namely indirect or market based and
direct instrument indirect instrument are usually used in market based
economics where the quantity of money stock can be effected through the
relationship between money supply and
reserve money as well s the ability of the monetary authority to influence the
creation of reserves. The reserves and money supply can be affected through the
following ways:
i.
Change in reserves/ deposit ration
ii.
Change in discount rate
iii.
Interest arte change
iv.
Engaging in open market operations (OMO)
In an under
developed financial environment the instrument of monetary management are
largely limited of direct measure which set monetary and credit targets ate
desired level. The major direct control measures is direct interest regulation
however quantitative ceiling or overall credit operation is also used.
The instrument
of monetary policy are applied in the achievement of various objective. However
all such objective are in consonance with the
board objective of he first
national rolling plan 1990-1992 which are the consolidation of the achievement
made so far in the implementation of the structural adjustment programme
(SAP). The plan is also to deed with
pressing problem of inflation particularly manufacturing and the inadequate
availability of foreign exchange with the aim of achieving higher level of
overall capacity utilization. It hopes
also to address the issue of low growth of non-oil exports other socio economic
problem to be addressed by the plan include the high growth rate of population
threats to the environment an the manager of
anti-social behavious such as armed robbery.
These broad objective
can be broken down to more direct objective namely. A high level of employment
price stability a sustainable level of
economic growth effectiveness of monetary policy measures against which
background of objective they were formulated has raised serious doubts as to the continuous use of
these policy measures.
It is in the
light of the above theoretical background that the author/ writer wishes to
carry out a study of monetary policy measures as an instrument of economic stabilization.
1.2 STATEMENT OF THE PROBLEM
Over the years
so may instrument of monetary policy have been in vogue not only to gear up the
level of investment but to cheek the perennial problems of unemployment prices
level instability lack of sustainable economic growth balance of payment
disequilibria imbruing to mobilize domestic saving a out put these level
consistently and persistently done severe damage to the Nigeria economy but
most strikingly these problem have continued
to plagues the economy unabated.
It is against
this background that the problems of this study have been identified and they
are as follow.
i.
Are monetary policy measures effective as instrument of
economic stabilization?
ii.
Have there been any significant variation in the use of
monetary policy to achieve desired objective and what has been the outcome
iii.
Is the implementation of monetary policy ideal
iv.
Could there by any remedy to these problem and family.
v.
Are there conduits or relationship between monetary
policy and fiscal policy measures
1.3 OBJECTIVE OF THE STUDY
In many parts of the world the objective of monetary policy today have transcended the
traditional function of maintaining a stable exchange rate and avoiding
business cycles. Explicitly government
seek to use monetary policy as an aid in the growth of output income and
employment maintenance of stable domestic prices level ands the strengthening
of payment Nigeria monetary police since independence has been geed towards the
following objective of this project which involve the following.
i.
To prevent and analysis the various monetary objective
and instrument for the period.
ii.
To demonstrate the general trend in monetary policy as
a tool achieving economic stabilization in Nigeria.
iii.
To ascertain the level of successes of policy measures
against desired objective.
iv.
To identify the factor that trend to hinder the full
attainment of the desire objective
To recommend the
appropriate policy measures for the achievement of specific objective as well
as recommend solutions to problem that hinder the full attainment of such
objectives.
1.4 RESEARCH HYPOTHESIS
Hypotheses are testable tentative and problem explanation of
the relationship between two or more variable the credit a state of affairs of
phenomenon. It may be reviewed as a
conjectural proposition an informed intelligent guess about the solution to
a problem the researcher therefore
deemed it necessary to establish the following hypotheses that.
1. Ho: A
reduction in money supply has led to a current account surplus
in the balance of payment
Hi: A
reduction in money supply has not led to
a current account surplus in the balance of payment
2. Ho: Increase
in net domestic credit has led to an increase in GDP
growth rate
Hi: Increase
in net domestic credit has not led to an
increase in GDP
growth arte
1.5 SIGNIFICANCE OF THE STUDY
This study should be of immense importance to all the
financial studies student. The accounting student need this study for their
continuous learning while other department need
it for the understanding of monetary policy. It can also be of
invaluable use to the following.
i.
To the student it will provide a complement to the few
existing texts on monetary policy and economic stabilization.
ii.
To researcher it will serves as a valuable sources of
data.
iii.
To the policy maker it highlights the mechanism for the
operation of monetary policy against achieving set goal and objective it also
analyze and suggest solution to the problem facing the full implement to
monetary policy measures.
iv.
To the investors it serves as a guideline o the effect
of monetary policy on various sector of the economy in which their funds can be
invested and finally.
v.
The study of monetary policy helps the bankers in
analyzing the effect of government action on their activities and whether these
action are on the whole favourable.
1.5 SCOPE
AND LIMITATION OF THE STUDY
The limitation
of this study can be emphasized by the following:
Measurement of
economic stability it show where one economic
indicator may fall within the deal range because of the result of the fact
while other do not. It become difficult to say
accurately and conclusively that he economy is stable.
The restriction of data pertaining
to certain sector of the economy. It therefore become difficult to assess the
impact of monetary policy on such sector.
i.
The
erratic nature of government in Nigeria there is a great deal of instability in
government therefore economic policy of which monetary policy is one is never
stable. It makes the implementation of
monetary policy faulty because it keep
changing with the advent of each new government.
ii.
The
mobility of the monetary authority to provide adequate statistics on the
performance of monetary policy measure adopted by them. this is largely due to the problems of ulegal
actions of the citizen who attempt to thwart the efforts of the monetary
1.6 DEFINITION OF TERMS
Economic stabilization: It
is the maintenance of a relatively stable and favouarble level for all the
economic indicators.
Macro- economic: It is the branch of economic that deals
with the study of the economy as a whole. It studies to the problem.
Monetary policy: The combination of measure designed to
regulate the supply of money to an economy.
Money stock: The amount of money in circulation at any
profit in time This is variable and
could be affected.
Reserve money: It is the amount of funds a bank is
required to maintain in the vaults.
Reserve ratio: Its ratio of the deposit that the banks are
required to maintain with the
central bank.
Discount rate: It is the rate at which the central bank lends
money to commercial banks discount house or other financial institution.
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