Impact Of Monetary Policy On Commercial Bank Lending In Nigeria (A Case Study Of Zenith Bank Plc)

ABSTRACT

This study investigated the extent the two major instruments of monetary policy (CRR and MPR) have impacted on commercial bank lending in Nigeria within the period 2002–2017. The problem that prompted this study was to critically examine the extent the two major instruments of monetary policy have impacted on commercial bank lending in Nigeria. The research objective was to investigate the impact of cash reserve ratio (CRR) and monetary policy rate (MPR) on commercial bank loan and advances in Nigeria. In the course of this study, the secondary data were extensively used and the method of analysis used in testing the hypothesis was the multiple regression analysis. The major findings were: Cash reserve ratio has a negative and insignificant impact on commercial bank lending in Nigeria; monetary policy rate has a negative and significant impact on commercial bank lending in Nigeria. Based on the findings some suggestions and policy recommendations were made: Due to the negative and insignificant impact of cash reserve ratio on commercial bank lending, there is an urgent need for CBN to reduce their cash reserve ratio on commercial banks in order to increase commercial bank lending ability. Also due to the negative and significant impact of monetary policy rate on commercial banks lending, CBN should redefine their monetary policy rate to make it more attractive to banks so that banks can reduce their interest rate on loans so as to make borrowing more attractive to investors and businessmen alike.  

TABLE OF CONTENTS

Title

Declaration ﾿ i

Certification ﾿ ii

Dedication                                                                    ﾿                         iii

Acknowledgement        ﾿                                                             iv

Table of Contents                                                    ﾿ v

Abstract                                                  ﾿                                     ix

CHAPTER ONE: INTRODUCTION 

1.1 Background of the Study ﾿ 1

1.2 Statement of the Problems ﾿ 4

1.3 Objectives of the Study ﾿ 5

1.4 Research Questions ﾿ 5

1.5 Research Hypotheses ﾿ 6

1.6 Significance of the Study ﾿ 6

1.7 Scope of the Study ﾿ 7

1.8 Limitations of the Study ﾿ 7

CHAPTER TWO: LITERATURE REVIEW 

2.1 Conceptual Framework ﾿ 8

2.1.1 Monetary Policy ﾿ 8

2.1.2 Institutional Framework of Monetary Policy in Nigeria ﾿ 9

2.1.3 Instruments of Monetary Policy ﾿ 10

2.1.4 Commercial Bank ﾿ 17

2.2 Theoretical Review ﾿ 19

2.2.1 Theory of Monetary Transmission Mechanism ﾿ 19

2.2.1.1 The Credit Channel Theory ﾿ 20

2.2.1.1.1 Balance Sheet Channel ﾿ 20

2.2.1.1.2 Bank Lending Channel ﾿ 21

2.2.1.2 Interest Rate Channel ﾿ 22 ﾿

2.2.1.3 Asset Pricing Channel ﾿           ﾿ 22

2.2.1.4 Exchange Rate Channel ﾿ 23

2.2.2 Monetary Policy Implementation in Nigeria ﾿ 24

2.3 Empirical Review ﾿ 25

CHAPTER THREE: RESEARCH METHODOLOGY 

3.1 Research Design ﾿ 28

3.2 Nature and Sources of Data Collection ﾿ 28

3.3 Area and Population of Study ﾿ 28

3.4 Model Specification ﾿ 28

3.5 Techniques of Analysis                                                                                                    29

3.6 Description of variables ﾿                                                                                                29                         

CHAPTER FOUR 

4.1 Introduction ﾿ 31

4.2 Presentation of Ordinary Least Square Regression (OLS) ﾿ 32

4.2.1 Impact of monetary policy on commercial bank lending in Nigeria ﾿ 32

4.2.2 Evaluation Based On Theoretical Criteria ﾿ 33

4.3 The statistical criteria (first order) test ﾿ 34

4.3.1 Coefficient of determination (R2) ﾿ 34

4.3.2 The t-statistic ﾿ 35

4.3.2 The f- test ﾿ 36

CHAPTER FIVE 

5.1 Introduction ﾿ 37

5.2 Summary of Findings ﾿ 37

5.3 Conclusion ﾿ 37

5.4 Recommendation ﾿ 38

Reference 

Appendixes ﾿                 ﾿