Monetary policy is
measures designed by the central authority to regulate the quality of money in
circulation. 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 banks and its effectiveness especially in controlling
the quality of money in circulation. In
this work the research collected data through the use of questionnaire. The
questionnaires were administered personally, by the researcher, which gave him
an opportunity to analyze that policy is a potent tool and a measure in
countering the operations of commercial banks. Based on the findings, the
researcher recommends among other the regulatory body should make sure that the
banks are there to formulate monetary policies, so that sanity will be
maintained in the banking industry and confidence restored.
TABLE OF CONTENTS
1.1 Background of the study
1.2 Statement of problems
Objective of the study
1.6 Significance of the study
1.7 Scope of the study
1.8 Limitation of the study -
1.9 Definition of terms
2.1 Objectives of monetary policy
2.2 Impact of monetary policy on the operation
of firs bank Nigeria plc.
2.3 Operational balance sheet performance of
2.4 Financial sector performance using balance
2.5 First bank Nigeria plc and policy on small
and medium scale investment scheme
2.6 Challenges facing monetary policy
2.7 Monetary and credit policy measures in
2005/2006 objectives and strategy policy
2.8 Relevant models or issue to monetary policy
3.1 Research design
3.2 Population of the study
3.3 Sample / sampling techniques
3.4 Method of data collection -
3.5 Method data analysis - -
4.0 PRESENTATION AND ANALYSIS OF DATA -
4.1 Data presentation - - - - -
Test of hypothesis - -
5.0 Summary, Conclusion And Recommendation
5.1 Summary of the findings -
5.2 Recommendations -
5.3 Conclusion -
Background of the Study
Government policies are used to pursue
development objective of government that bothers on meeting the welfare of the
citizens they could be socially, politically, economically, religious wise,
environmentally population and so on. These policies are used to credit control
and discount rate. The banks are one of the financial institutes that formulate
the policy objectives and achievement of these goals. This research involves
the case study of First Bank Nigerian Plc.
First Bank Nigerian Plc was incorporated
as a limited liability company on March 31, 1894 with the head office in
Liverpool by Sir Alfred Jones a shipping magnate. It started in the office of
Elder Dempster and company in Lagos under thee cooperate name of Bank of
British West African (BBWA) with a rapid up capital of 12,000 pounds sterling.
After absorbing it predecessor the African banking cooperation, which was
established earlier in 1892. In the early year of operation the bank has an
impressive growth. The changing of the banks name occurs in 1979 abd 1991 to
First Bank Nigerian Plc. It commenced business operation on October 1988 and
was converted to a public limited liability company in June 1992.
the bank went into a merger arrangement with former Atlantic Bank Plc, IMB international Bank Plc. The sharing of
the new banks are quoted on Nigeria stock exchange consolidated.
1.2 Statement of problems
The under-developed nature of the Nigeria financial market.
There is very much presented in Nigeria where by expected revenue fall below
expenditure. This occurrence leads to direct injection to aggregate demand and
increase pressure price level.
The issue of non bank financial institution (NBF) which are ruing in numbers
and operations. They adopt deposit but up till now, they are under the central
banks of Nigeria (CBN).
4. There is delay in the conduct of monetary
policy in Nigeria.
There is delay in releasing the reserve government annual budget which causes
economic units to suspend their activities.
1.3 Objective of the study
To determine monetary policy has any influence on the profit of the banks or
Nigeria Plc and also on its, loan deposit and affiances.
Finally to make necessary recommendations that would improve monetary policy in
3. It is also vital to central bank and
other monetary authorities. Monetary authorities have this work of keeping
economic indicators within reasonable limits. This research would definitely be
of assistance to the monetary authorities in achieving this aim because it will
provide an insight as to which tool would be most appropriate for influencing
1.4 Research Question
1. Does monetary policy influence the
their impact effectively contribute to the small and medium industries in Nigeria?
the impact of monetary policy influence the profit deposit as well as loan and
advances of commercial bank?
monetary policy influence on the performance of commercial banks in Nigerian
1. Ho: Monetary policies have influence on
profit deposit of commercial banks in Nigeria.
Hi: Monetary policies do not have influence on
profit deposit of commercial banks in
Ho: There is
significant relationship between monetary policy and profit of commercial banks
Hi There is no significant
relationship between monetary policy and profit of commercial banks in Nigeria
1.6 Significance of the study
Student would use it for reference purpose when conducting their researcher.
2. Practicing bankers would find relevance in
this study, theists because it will help to fine out which monetary policy
instruments influence bank performance of the most and to them in important
matters of decision.
An ultimate aim of this study is to bring about stability in the banking system
and hence the economy as a whole and this would be of significance to the
citizens of the economy.
1.7 Scope of the study
As Anyanwu (2000) especilied out a
research is not expected to cover a discipline in the cause of the study in
line with this statement of this project
work and would not cover every thing on this study, it will significant
determine the reliability of its findings. Hence only two performance indicator
would be analyzed. Despite the fact that there are other like “nets” income
before taxes total assets deposit and in come.
The monetary policy tools that would
be involved in this study are open market operation (OMO) required ration (RRR)
the cash reserve ration (RR) interest ratio policy (IRP) and exchange rate
policy (ERP), the following policy instrument will be excluded such as discount
rate Policy (DRP) and moral suasion.
It is an experimental study, it is not
a full experiment since I would not require a pre-test and post-test analysis
nether will it require an experiment and control group analysis. It is a case
study research and will therefore be particular about banks.
First bank of Nigeria plc and with
there size and spread of operations is a representative case study. It has two
branches in Owerri that is first bank and has two branches, in Owerri and has
other branches in the nation.
Limitation of the study
conducting a research work of this nature certain restrictions are bound to
affect the study. These include the following
Money being a scarce commodity, a
student will not have enough money to meet up their entire financial obligation
by traveling to many organizations which is a pre-requisite for a research
project. As a result of this defect, this study will center on the impact of
quantitative tools on the performance of deposit of commercial banks in Nigeria
with reference to First Bank of Nigeria Plc.
A research work of this nature cannot be
accomplished within a short period of time. It requires time if one actually
wants to write exhaustively on the topic.
some employees of the bank and to who questions were asked declined interest
every attempt made to persuade them proved abortive, due to their own time
schedule being a limitation to the project.
Definition of Terms
is the period between the conception of an idea and the implementation.
System: This is the conglomeration of market institutions,
regulatory authorities, intermediates and the dealers in economy.
Trend: The upward or downward i.e. increase in the rate of
Rate: This is a rate at which banks make advance to their
Supply: This is the summation or total amount or stock of
This is the process of insuring that firm activities conform to as planned in
ensuring that objectives are achieved.
These are instrument used for a particular kind of work.
Market Operation: This is defined as the selling or buying
of government securities in the financial markets by the central bank.
Policy: this can be defined as the major economic
stabilization weapon which involves measure designed to regulate the volume,
cost availability and direction of money and credit in the economy.
Traps: This is defined as a case where the interest rate
falls so low that individuals and business wish to hold any new money created
in the banking system as speculative balance.
Security: These are securities specifically issued by the
Central Bank at time it deems fit for the purpose of moping up excess liquidity
in the banking system.
Rate: This is a price of capital to the borrower and return
on capital to the saver or lender.
Rate: This is also known as minimum rediscount rate or bank
rate is a rate at which Central Bank offer financial assistance to financial
institutions through loans or discounting bills.
Account: This is an account in which a person keeps a specific
sum of money for an agreed period of time.
Budget: This is a type of budget prepared by an organization
based on the availability of cash.
Sheet: This is a financial statement that shows the
activities of an organization within a specified period.
Money: These are money that is not cash or paper-money but
are also used for transaction purpose and also regarded as money.