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The Performance Of Monetary Policy In The Nigerian Economy (1980-2010)
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1.2 STATEMENT OF THE PROBLEM
one a yearly basis, the
monetary authority formulate guidelines geared towards the enhancement
and development of policy variable designed to ensure optimal
performance of the banking industry and ultimately to advise the
macroeconomic goals or objectives but in the implementation of such
policy variable certain conflicting issues are to be addressed ranging
from the ability to comply with various monetary policy goodliness as
well as satisfying depositors and shareholders. In fact, commercial
banks are reluctant in their responsibility to comply with the rules and
regulations set by the central bank such as the open market operation
(OMO), required reserve ratio (RRr), bank rate, liquidity ratio,
selective credit control and moral suasion. These are the instruments of
central bank in controlling the activities and operations of commercial
banks in other to achieve the macroeconomic objective such as growth,
price stability balance of payment equilibrium, full employment. The
central bank of Nigeria (CBN) guidelines helped in setting of the
interest rates charged by the commercial banks, sales or purchases of
securities to control the money supply, and changes in the required
reserve ratios of banks and other financial institutions. The guidelines
affected other interest are both through open market operations to
affect the probability that the banks are going to need to borrow at its
own lending rate, and by the announcement effects of changes in the
central bank’s minimum lending rate, which are regarded by the markets
as statement about the authorities forecasts and objectives. The CBN
guideline on monetary policy works through the effect of the cost and
availability of loans to real activity, and through this on inflation,
and on international capital movement and thus on exchange rate.
Central
Bank of Nigeria and the federal government’s formulation and
implementation of the monetary policy more or less finds its ultimate
translation to the economy in real terms. The controversy bothering
whether or not monetary policy measures actually impact on the Nigerian
economy is a problem this study sets to solve.
1.3 OBJECTIVE OF THE STUDY
The
broad objective of the study is to examine the effectiveness of
monetary policy in the Nigerian economy. The specific objectives are as
follows.
 To assess the impact of money supply on economic growth in Nigeria
 To determine the impact of liquidity ratio on economic growth in Nigeria.
 To ascertain the effect of interest rate on Nigeria’s GDP
1.4 STATEMENT OF HYPOTHESES
The hypotheses tested in this study are stated in their will forms as follows
H0: Money supply has no significant impact on GDP in Nigeria
H02: Interest rate in Nigeria has no significant impact on GDP
H03: There is no significant relationship between liquidity ration and GDP in Nigeria
1.5 SCOPE OF THE STUDY
This
work is aimed at examining the performance of monetary policy is on the
Nigerian economy, the effects, the appraisal, and possibly the solution
to the problems facing the implementation and working of monetary
policies in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
This study will
be of great benefit to bankers, investment analysts, government
agencies, academics, private and public sectors more so, it will be
useful to policymakers in the attempt to fashion out dynamic and
reliable monetary policy measure for controlling commercial banks
ability to create money and thereby influence the effective development
of the economy.
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ABSRACT - [ Total Page(s): 1 ]The purpose of this project work is based on the relative performance of monetary policy in the Nigerian economy. This work discussed the meaning of monetary policy is as combination of measures designed to regulate the value, supply and cost of money in an economy in consonance with the expected value of economies activities. The study shows further, the aims and objectives of monetary policy which includes price stability, maintenance of balance of payment equilibrium, promotion of employment, ... Continue reading---
