ABSTRACT

This study investigated the extent the two major instruments ofmonetarypolicy (CRR and MPR) have impacted on commercial bank lending in Nigeria within the period 2002—2017. The problem thatprompted 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 ofanalysis used in testing the hypothesis was the multiple regression analysis. The majorfindings 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 andpolicy recommendations were made: Due to the negative and insignificant impact ofcash reserve ratio on commercial bank lending, there is an urgent needfor 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 interestrate on loans so as to make borrowing more attractive to investors and businessmen alike.