THE IMPACT OF MONETARY POLICY ON THE REFORMATION OF THE FINANCIAL SECTOR OF THE NIGERIA ECONOMY

CHAPTER ONE

1.  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.