Effect of Monetary Policy on Financial Intermediation in Nigeria

Origin, Chukwu, Kenechukwu and Nneka, Ogbonnaya-Udo, (2020) Effect of Monetary Policy on Financial Intermediation in Nigeria. Asian Journal of Advanced Research and Reports, 13 (3). pp. 22-36. ISSN 2582-3248

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Abstract

The study examined the effect of monetary policy on financial intermediation in Nigeria. Secondary data were collected from Central Bank of Nigeria statistical bulletin spanning from 1988 to 2018.The research work selected Nigeria as its sample and used the VECM to test the effect of the explanatory variables (Monetary Policy Rate, Cash Reserve Ratio, Loan to Deposit Ratio and Liquidity Ratio) on the dependent variable (Total Domestic Bank Credit).The findings from the study revealed that monetary policy has insignificant effect on intermediation in Nigeria. The granger causality test also shows a unidirectional causality between monetary policy and intermediation in Nigeria. The results suggest that lending interest rate is still high while deposit rate is low and this discourages savings and borrowing in the country. The study recommends among others that monetary policy should be reviewed in order to lower the cost of borrowing (lending rate) so as to encourage investors to borrow more. Commercial banks should try to increase its deposit rates which will help them to mobilize more deposits, as this will enhance their lending services. Financial infrastructure in the country should be improved upon as this will help banks in deposit mobilization especially the unbanked in the country.

Item Type: Article
Subjects: Souths Book > Multidisciplinary
Depositing User: Unnamed user with email support@southsbook.com
Date Deposited: 16 Mar 2023 12:32
Last Modified: 29 Jul 2024 11:26
URI: http://research.europeanlibrarypress.com/id/eprint/343

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