TO GET THE COMPLETE JOURNAL/THESIS FOR TOPIC BELOW,
CALL: 08168759420, 08068231953
WHATSAPP: 08137701720
EFFECTS OF MONETARY POLICY ON THE COMMERCIAL BANKS LENDING IN NIGERIA
Abstract
This paper empirically examines the effect of monetary policy on commercial bank lending in Nigeria between 1988 and 2008, using macroeconomic time series variables of exchange rate, interest rate, liquidity ratio, money supply, and commercial bank loan and Advances. Using Vector Error Correction Mechanism of Ordinary Least Square econometric technique as the estimation method. The findings indicate that there exists a long run relationship among the variables in the model. Specifically, the findings revealed that exchange rate and interest significantly influenced commercial bankslending, while liquidity ratio and money supply exert negative effect on commercial banks’ loan and advances. The major conclusion drawn is that monetary policy instruments are not effective to stimulate commercial bank loans and advances in the long-run, while banks’ total credit is more responsive to cash reserve ratio. Thus, monetary authority should make efforts to develop indirect monetary instruments and exercise appropriate control over the monetary sector.
Keywords: Monetary Policy, Commercial Bank loans and Advances, Money Supply, Interest Rate, Exchange Rate