Monetary Policy and Financial Performance of Listed Deposit Money Banks in Nigeria
Keywords:
Monetary Policy; Cash Reserved; Actual Lending Rate, Exchange Rate; The Monetarist Theory; Return on AssetAbstract
The study examined the impact of monetary policy on firm performance of listed deposit money
bank in Nigeria. The objective of the study was to determine the effect of cash reserved on return
on asset of listed deposit money bank in Nigeria., ascertain the influence actual lending rate on
return of asset of listed deposit money bank in Nigeria. As well examine the relationship between
exchange rate and return on asset listed deposit money bank in Nigeria. This Study is predicated
on the Keynesian theory of monetary policy and the monetarist theory. The population of the study consisted on thirty-three (33) deposit money banks listed on the NSE,
however, only five (5) samples were selected from the population. Secondary data source was
explored in presenting the facts of the situation were obtained from audited financial report of
sample deposit money bank covering a period of ten (10) years (2010-2020). The collected data
were analyzed using Descriptive, Granger Causality and Ordinary Least Square (OLS)
regression analysis. From the results of the findings, it was revealed that cash reserved (RCR) has a significant
effect on return on asset (p<0.034); actual lending rate has a significant effect on return on asset
(p<0.0343), however, exchange rate has significant effect on return on asset of listed deposit
money bank (p>0.0032). The study concluded that there exists strong positive relationship
between exchange rate, cash reserved and actual lending rate which is significant. Based on the
findings, it was recommended that Central Bank of Nigeria (CBN) should recommend to the
government of Nigeria that lending rates be set at an optimal level since this would assist to
enhance credit growth, money supply, and in turn, returns and profitability of deposit money
institutions in Nigeria.
References
Ajayi, F. O. &Atanda, A. A. (2012). “Monetary Policy and Bank Performance in Nigeria: A Two step Cointegration Approach”. African Journal of Scientific Research,9, (1): 463- 476.
Akomolafe, K. J. (2014). Financial Deepening and Economic Growth: Evidence from Nigeria” International Journal of Economics, Commerce and Management, 2 (11).
Akomolafe, K. J., Danladi, J. D., Babalola, O., &Abah, A. G. (2015). Monetary Policy and Commercial Banks’ Performance in Nigeria.Public Policy and Administration Research, 5(9): 158-166.
Amacher, R. C. &Ulbrich, H. H., (1986).Principles of macroeconomics. South Western: Publishing Co. Cincinnati.
Anyanwu, J. C. (1993). Monetary economics: Theory, policy and institutions. Onitsha: Hybrid Publishers Ltd.
Aurangzeb, C. (2012). “Contribution of Banking Sector in Growth of Pakistan”.Economics and Fiannce Review, 2 (6): 45-54.
Ayodele, O. M. (2014). Effect of monetary policy on commercial banks’ lending in Nigeria, Review of Public Administration and Management, 3 (5).
Bawa, A. B, Akinniyi, K.O &Njarendy P. I. (2018). Cash Reserve Ratio, Money Supply and Profitability of Deposit Money Banks in Nigeria.International Journal of Financial Management, 7(4): 9-18.
Dhungana, N. T. (2016), Effect of monetary policy on bank lending in Nepal, International Journal of business & management review, 4(7):1-10.
Emeka, E. E, Agok, S. A., &Ene, J. C., (2015). Effect of Interest Rates Deregulation on the Performance of Deposit Money Banks in Nigeria. International Journal of Managerial Studies and Research, 3(9): 164-176.
Eke, F. A., Eke, I. C., &Inyang, O. G. (2015). Interest Rate and Commercial Banks’ Lending Operations in Nigeria: A Structural Break Analysis Using Chow Test. Global Journal of Social Sciences, 14, 9-22.
Ekpung, G. E., Udude, C.C. &Uwalaka, H. I. (2015).The impact of monetary policy on the banking sector in Nigeria.International Journal of Economics, Commerce and Management, 3 (5): 1015-1031.
Enyioko, N. (2012) Impact of interest rate policy and performance of deposit money banks in Nigeria. Global journal of management and business research,12 (21).
Hassan, O. M. (2016). Effect of Interest Rate on Commercial Banks Deposits in Nigeria.Proceeding of the First American Academic Research Conference on Global Business, Economics, Finance and Social Sciences, 1-17.
Ibeabuchi, S. N. (2007). Overview of monetary policy in Nigeria.Central Bank of Nigeria Economic and Financial Review, 45 (44): 15-37.
Imoisi, A. I., Olatunji, L. M &Ekpenyong, B. I. (2013), “Monetary Policy and Its Implications for Balance of Payments Stability in Nigeria: 1980-2010”, International Journal of Economics and Finance, 5 (3): 196-204.
Mengistu, M. M. (2015). Evaluation of the Financial Performance of Banking sector in Ethiopia: The case of Zemen Bank. Global Journal of management and Business Research &Finance, 15(9): 29-38.
Ndubuaku, V.C., Ozioma, I., Nze, C., &Onyemere, S. (2017). Impact of monetary policy (interest rate) regimes on the performance of the banking sector in Nigeria.Journal of Economics and Finance, 8 (4): 16-32.
Ndugbu, M. O. &Okere, P. (2015). Monetary policy and the performance of deposit money banks: The Nigerian experience. European Journal of Business and Management, 7 (17): 65-72.
Obidike, P. C., Ejeh, G. C., &Ugwuegbe, S. U. (2015).The impact of interest rate spread on the performance of the Nigerian Banking Industry. Journal of Economics and Sustainable Development, 6 (12): 131-139.
Ogbeifun, I.E &Akinola, A.O (2019).Impact of qualitative monetary policy on performance of deposit money banks in Nigeria, International Journal ofDevelopment Research, 9 (7), 28833-28840.
Ogundipe, A. S., Akintola, A. F., &Olaoye, S. A., (2020).Interest Rates and Loan Performance of Deposit Money Banks in Nigeria.International Journal of Economics and Business Review, 8(1): 13-20.
Okoye V., &Eze, O. R. (2013).Effect of Bank Lending Rate on the Performance of Nigerian Deposit Money Banks.International Journal of Business and Management Review, 1 (1): 34-43.
Oladele, S. A., Amos, M. O., &Adedeji, A. A. (2017).Effects of Interest Rate on the Profitability of Deposit Money Banks in Nigeria. European Journal of Business and Management, 9 (10): 46-55.
Onoh, U. A. (2017). Monetary policy and their effect on turnover ratio of commercial banks in Nigeria, Journal of Business & African economy, 3 (1): 61-95.
Onouorah, A., Shaib, I. O., Oyathelemi, E. & Friday, O. I. (2011).The impact of monetary policy on microeconomy and private investment in Nigeria.Research Journal of Finance and Accounting, 2(6): 65.
Onyemaechi, J. O. (2005). Monetary theory and policy. National Open University of Nigeria Ahmadu Bello Way, Victoria Island, Lagos.
Osuka, B. O. &Osadume, C. R. (2013). The Determinants of Financial Performance of quoted Banks in Nigeria: A study of selected banks. An International Journal of Education and Research, 1 (10).
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Festus Oladipupo Olaoye, Olaniyan Niyi Oladipo
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The author fully assumes the content originality and the holograph signature makes him responsible in case of trial.
