The Impact Of Monetary Policy On Bank Performance; 1980 -2006

ABSTRACT

The study investigated the impact of monetary policy on bank performance, covering the period, 1980-2006. While bank performance was measured through the total external assets of all commercial banks in Nigeria, the cash reserve ratio, liquidity ratio, interest rate, minimum rediscount rate and treasury bills rate, represented instruments of monetary policy. Adopting the multiple regression model, the study confirmed the existence of a significant relationship between monetary policy instruments and bank external assets. Also revealed, is the existence of a significant impact of two monetary policy instruments (cash reserve, ratio and minimum rediscount rate) on net external assets of commercial banks while treasury bills rate, liquidity ratio and interest rate , all failed to contribute significantly to the external" assets of banks. On the strength of these findings, some of the major recommendations are that me monetary authorities need to pay more attention to the use of, especially the cash reserve ratio and minimum rediscount rate .as measures towards helping both the banks and the economy to grow. Similarly, treasury bill rate, liquidity ratio and the interest rate, all need special attention of the CBN for L bank performance to improve.