MONETARY POLICY INSTRUMENTS AND FINANCIAL PERFORMANCE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

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Date

2021-06-01

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Department of Accounting, Nasarawa State University, Keffi

Abstract

This study examines the effect of monetary policy instruments in terms of open market operation (OMO), cash reserve ratio (CRR), and monetary policy rate (MPR) on financial performance (ROA) of quoted deposit money banks (DMBs) in Nigeria. Expost facto research design was adopted using panel data collected from the financial reports of the sampled quoted banks and the CBN Bulletin for the period of 10 years spanning 2010 through 2019. Panel regression analysis was used and it was found that; OMO has an insignificant negative effect on ROA, while CRR has a significant negative effect on ROA. In the case of MPR, an insignificant positive effect on ROA was found. The study concludes that monetary policy is negatively related to financial performance of quoted DMBs and recommended among others that, CRR should be reduced by the CBN on quoted DMBs with a view to improving money in circulation for improved liquidity base in the banks and consequence increase in the credit level for increase in profitability.

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Keywords

Open Market Operation, Cash Reserve Ratio, Monetary Policy Rate, Profitability, Quoted Deposit Money Banks, Nigeria.

Citation

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URI

https://keffi.nsuk.edu.ng/handle/20.500.14448/718

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