IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 4 NO. 1 2018

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Bank Asset Quality Performance among Nigerian Banks - The Role of Monetary Policy

Obioma, James and Charles Onyebueke

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Abstract

This research investigated the role of monetary policy in bank asset quality performance of Nigerian banks. There have been mixed results as to the role of monetary policy on many performance indicators in the past by different scholars. Those indicators could be profitability, asset growth and returns on investments. So the research goal was to find out loss internal profits. The Central Bank of Nigeria (CBN) should adjust the monetary policy rate by reducing the cash reserve ratio which will increase liquidity to enable the commercial banks to discharge their lending and investment duties effectively to the public. the impact of monetary policy instruments-money supply, liquidity ratio, monetary policy rate, and cash reserve ratio- on commercial banks asset performance. The literature review extensively looked at the work done by past scholars on the different transmission channels through which monetary policy affects banking and economic activities and these channels of transmissions have been broadly examined under the monetarist and Keynesian schools of thought. In the research methodology used secondary while employing multiple regression method/model as econometric technique in estimating the relationship between monetary policy and bank performance proxy by loans and advances, assets and turnover ratio. The study also used the ordinary least square (OLS) and unit root (Augmented Dickey Fuller) test to determine the stationarity or otherwise of the variables. Studies such as Apere and Karimo (2015); & Ndugbu and Okere (2015) have shown that the use of OLS with non-stationary variables may result in spurious regression results. The empirical results emanating from the analysis indicates that monetary policy had some level of effect on bank performance proxied by Turnover rate (TOR), Bank Assets (BAS) and Loan and Advances (LADV). It is equally indicative of the fact that the relationship is instrument sensitive, i.e, some monetary policy

keywords:

Bank, asset quality, performance and Nigerian banks

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