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