THE IMPACT OF MONETARY POLICY ON THE REFORMATION OF THE FINANCIAL SECTOR OF THE NIGERIA ECONOMY
Abstract
The research work tends to examine crucially the impact of monetary policy on the reformation of the financial sector of the Nigeria economy. In this research work, the researcher intends to look at how various effective monetary tools such OMO(open market operation) special deposits moral suasion, bank rate etc, will be used by the central banks of Nigeria (CBN) and other financial institution to curb or curtail inflation affecting the economic growth and development in the country. There have been so many writing as regard the impact of monetary and fiscal policies or restructuring of the financial sector of Nigeria. These funding will be useful in providing recommendation and different techniques in easing the problems associated with banking sector in the country. A prolongs inflation in a country like ( Nigeria ) were too much money chasing few goods speedily drag an economy to recession and with that the monetary disrupt the balance of payment equilibrium the informational seen trade so it is paramount importance why the apex bank effortlessly confines to monitor and regulates the activities of the financial institutions. The research work tends to cover as much as possible all aspect of monetary policy with much emphasis and relevance to the Nigerians the financial sector.
TABLE OF CONTENT
Title page
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
CHAPTER ONE
1.0 | Introduction 1 |
1.1 | Background of the study 1 |
1.2 | Statement of the problem 2 |
1.3 | Objectives of the study 2 |
1.4 | Formulations of research questions 3 |
1.5 | Significance of the study 3 |
1.6 | Scope of the study 4 |
1.7 | Limitations of the study 4 |
1.8 | Definitions of terms 4 |
CHAPTER TWO | |
2.0 | Literature review 6 |
2.1 | Brief outlines of the study 6 |
2.2 | Historical background of the study 6 |
2.3.1 | Open market operations (OMO) 9 |
2.3.2 | Liquidity requirement 10 |
2.3.3 | Discounts rates of operation 10 |
2.3.4 | Special deposit 10 |
2.3.5 | Directive from CBN 11 |
2.3.6 | Moral suasion 11 |
2.4 | The CBN prudential guidelines for licensed bank 13 |
2.4.1 | Minimal rediscount rate for licensed bank by CBN 13 |
2.4.2 | Five ailing banks recently monitored by CBN 2009 13 |
2.5 | Objectives of monetary policy 16 |
2.6 | Nigerian financial markets 17 |
2.7 | Importance of capital markets to the Nigeria economy 18 |
CHAPTER THREE | |
3.0 | Research methodology 20 |
3.1 | Research design 20 |
3.2 | Population and sample 21 |
3.3 | Sample size and sampling procedures 21 |
3.4 | Instrument for data collection 21 |
3.5 | Validity of instrument 21 |
3.6 | Reliability of instrument 22 |
3.7 | Method of data collection 22 |
3.8 | Method of data analysis 22 |
CHAPTER FOUR | |
4.0 | Presentation and analysis of data 24 |
4.1 | Data presentation 24 |
4.2 | Test of hypothesis 34 |
CHAPTER FIVE | |
5.0 | Summary, conclusion and recommendations 38 |
5.2 | Summary of findings 38 |
5.3 | Conclusions 38 |
5.4 | Recommendations 40 |
5.5 | Bibliography |
Appendix | |
Questionnaire |
CHAPTER ONE
- INTRODUCTION
1.1 BACKGROUND OF STUDY
Monetary policy has central role in macroeconomic management, primarily because of the close relationship between the monetary aggregate and economic and economic activities. This is true irrespective of whether one considering the monetarist or Keynesian frame work.
The monetary framework of an economy is definitely a scientific device but its application appears to be more of an act in practice, many factor other than the logic of the theoretical framework, comes into play, one of the key determinant of the types of monetary management is the economic environment , although it may be derivable to introduce some monetary instrument , the environment for their effective use may not be suitable, this fact should be born in mind as well as the subject of monetary policy impact on the financial sector of Nigerian economy over the past decades, the shift in the approach to economy management from direct government control to market base policy having gain momentum, both in the industry and developing countries. The deriving force has been the desired for enhanced efficiency in the mobilization and utilization of resources.
In this context, an increasing number of countries have embarked on upon a comprehensive adjustment design to promote a macro- economic environment and also provide a versatile institutional arrangement necessary for free market economy.
An important element of this adjustment process is the financial sector reforms that will help to establish a solid formation for effective implementation of market based monetary policy. The effectiveness of this adjustment to an improvement in Nigeria economy is what border this researcher and by that seeking for adequate solution to the solution to the problem
1.2 STATEMENT OF THE PROBLEM
The general fluctuation behavior and distress witnessed in the financial sector of Nigeria is one general issue that has been of a source of concern to an average Nigeria analyst and hence have sought for means of a better financial cycle with excellent operation especially in the banking sector. It is the plan of the study to give sufficient background on the already evolved monetary policy in Nigeria so as to present a clear picture of the effort to introduce open market operation or to fund a solution to distress economy as an instrument of reforming the Nigeria financial sector.
1.3 OBJECTIVES OF THE STUDY
The environment, both local and foreign is a complex and dynamic one and the economy is faced with a lot of challenges, problem and prospects. These could arise from internal and or external factors.
However, the objectives of this study are as follows.
- To asses one of the tools of indirect management in Nigeria and its effect on the financial sector of the Nigeria economy.
- To examine the challenge posed to the monetary authority in Nigeria.
- The familiarized financial analyst with the important of financial sector reforms to the market principles.
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