Impact Of Monetary Policy On The Profitability Of Deposit Money Banks In Nigeria (1986 - 2006)

ABSTRACT

The study evaluates the impact of monetary policy on profitability of deposit money banks in Nigeria, between 1986 and 2006. Specifically, it examined CBNs monetary policies as well as profitability of deposit money banks and the extent to which banks performance is enhanced. It also identified the level of measures adopted by government towards increased performance of banks determined the level to which interest rate enhances profitability within the period under review, determine the relationship between cash reserve ratio and profitability. Judgmental sampling technique was used in obtaining relevant data for the study. Data was collected using secondary information only which was valid and reliable as vetted by the researcher's supervisor. Descriptive statistics was used in presentation of data; while linear multiple regression analytical tools was used in justifying the formulated hypothesis and analyzing data collected. Result from the findings shows that government contributes significantly to deposit money banks profitability through basic policies and reforms. Cash reserve ratio was found to be significant at 5% and positively related to profitability, banks spread was significant at one percent which positively relates to profitability, interest rate was significant at 10% and negatively related to profitability. It was recommended that government should consolidate on existing policies for improved banks profitability, ensure public, private participations in the provision of a stable and favorable interest rate for increased bank performance.