Monetary Policy and the Performance of Deposit Money Banks - the Nigerian Experience.

Abstract

This study investigated the impact of monetary policy on the performance of deposit money banks – the Nigerian Experience(1993-2013).Data for this study were collected from the Central Bank of Nigeria (CBN) statistical bulletin, annual reports and statement of accounts. Ordinary Least Square and co integration were used to evaluate the impact of monetary policy on the performance of deposit money banks. The Augmented Dicker Fuller (ADF) unit root test and co integration proved that the variables are stationary and a long-run relationship exist among the variables The OLS revealed that amongst all the monetary policy variables (bank deposit rate, bank lending rate, cash reserve ratio and liquidity ration) considered in the model, only bank deposit rate has significant relationship though inverse relationship. On this premise, the study recommends among others, that the Central Bank of Nigeria (CBN) should moderate the deposit rate as a tool for regulating deposit money banks operation.  Again there is need to modify the monetary policy instruments to reflect and respond more rapidly and easily to local economic conditions.

Keywords: Financial Super Structure, Monetary Policy, Bank Performance.