The effect of monetary policy on the banking industry

Thesis Overview

<p> </p><ol><li><strong>INTRODUTION</strong></li></ol><p>Monetary policy<br>constitutes the major policy thrust of the government in the realization of<br>various macro economic objectives. It is refers to the combination of<br>discretionary measures designed to regulate the control the money supply in an<br>economy by the monetary authorities with a view of achieving stated or desired<br>macro- economics goals.</p><p>&nbsp; The monetary policies are designed to<br>influence the behavior of the monetary sector. This is because change in the behavior<br>of the monetary sector influence various monetary variable or aggregate. The<br>monetary policy enforces at any point in time affect the level of money supply<br>either by expanding it or through contraction of same. It influences the level<br>of and structure of interest rates and thus cost of funds in the the market, depending<br>on the prevailing economic to condition.</p><p>&nbsp; The regulation and control of the volume and piece<br>of money is called discretionary control of money: discretionary in the sense<br>that it is made act the instance bank of Nigeria (CBN) has the responsibility<br>of controlling money and credit in the economy in order to check inflationary<br>and deflationary pressure. As the apex monetary authority, has the duty of<br>ensuring that polices are set in motion to regulate the financial sector so as<br>to operate in the same direction with the real <br>sector in order &nbsp;to realize<br>national economic objective.</p><p>&nbsp; Sector 2(c) of CBN Decree 24 of 1991 as<br>amended stated that one of the principle object of the bank (CBN) shall be “to<br>promote monetary stability and a sound financial system in Nigeria “.<br>While part v section 3 (a) of the same degree produce that the bank (CBN) shall<br>power to carry out open market operations for the purpose of maintaining<br>monetary stability in the economy of the country and without prejudice to the<br>generality of the foregoing, the bank may also for that purpose issue sell,<br>repurchase, amortize or redeem securities to be known as stabilization<br>securities (which shall constitute it obligation) and the securities shall be<br>issue at such rate of interest and under such condition of maturity,<br>amortization , negotiability and redemption as the bank may deem appropriate”.</p><p>&nbsp;Moreover, these polices issued by the central<br>banks are targeted toward the control of the commercial banks and the<br>commercial banks who mobilize these funds from individual depositor. Sometimes<br>are restricted by the polices from engaging in some activities through shift of<br>the of the monetary policy and that can affect the bank.</p><p><strong>1.1 &nbsp; BACKGROUND OF THE STUDY</strong></p><p>&nbsp; Monetary polices has central role in<br>macro-economics managements, primary because of the close relationship between<br>the monetary aggregates and economic activities. This is time irrespective of<br>whether one considering the monetarist or Keynesian framework.</p><p>&nbsp;The monetary framework of an economy is definitely a scientific device but its application appears to be more of an art in practice , many factor other the logic of the theoretical framework, comes into play, some of the key determinant of the types of monetary management.</p><p>&nbsp;The central bank derivable to introduce some<br>monetary instrument, this fact should be born in mind as we as the subject of<br>monetary policy impact on the financial sector of Nigeria central bank.</p><ol><li><strong>STATEMENT<br>OF THE PROBLEM</strong></li></ol><p>Monetary policy instrument<br>have in one way or the other affect the operation of the banking system. The<br>implication this either creates a positive or negative impact on the overall operation<br>ns of the commercial banks.</p><p>&nbsp; However, the main aim of the monetary<br>authority is to produce a regulated environment that would stabilize the<br>macro-economic unbalance. In recent times, most commercial bank becomes<br>illiquid. other problems therefore to be studied in this research work<br>includes:</p><ol><li>The<br>negligence exhibited by some com metrical banks in implementing some of these<br>polices established by the monetary authority.</li><li>&nbsp;The hindrances which have been militating<br>against the efficiency of the financial system in the country</li><li>&nbsp;The impact of the monetary on the banking<br>industry and the economy at large.</li><li>&nbsp;The problem of irregularity in information<br>dissemination between the monetary authority, commercial banks and the<br>customers.</li></ol> <br><p></p>