IMPLICATIONS OF MONETARY POLICY ON BANK PERFORMANCE IN NIGERIA: 2000-2023

Résumé

This study examined implications of monetary policies on bank performance in Nigeria covering the period 2000 to 2023. Background: Monetary policy refers to the set of policies intended to control the amount, cost, and value of money in an economy. There seems to be shallow, limited mechanism and inconsistent monetary policies which makes it unable to effectively achieve mobilization and allocation of resources. Also, the desired macroeconomics objectives through monetary policy seems not to have been sustainable enough as inflation keeps rising and the currency loosing value. Aims: The specific objectives were to evaluate the effects of:  deposit rate; lending rate; liquidity ratio and loan to deposit ratio on banks performance in Nigeria. Methods: The ex-post facto research design was adopted. Data were obtained from CBN statistical bulletin and analyzed using descriptive statistics, ADF unit root test and OLS. The independent variables were: deposit rate (DEPRT); lending rate (LENDRT); liquidity ratio (LIGRT); loan to deposit ratio (LDRT), while the dependent variable was total savings of other financial corporations. Four hypotheses were formulated in line with the objectives and tested at 5% level of significance. Results: (1) DEPRT had non-significant effect on TSODC; (2) LENDRT had significant effect on TSODC; (3) LIGRT had non-significant effect on TSODC; (4) LDRT had non-significant effect on TSODC. (5) There was no unit root, the probability (f-statistic) was 0.004654 while adjusted R2 value was 46%. Conclusion: The Central Bank of Nigeria should re-appraise the effectiveness of her monetary policies and ensure their proper contribution to deposit of banks and achieve the desired goals in the economy.