IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 10 NO. 7 2024
DOI: 10.56201/ijebm.v10.no7.2024.pg198.209

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Monetary Policy and Financial Intermediation in Nigeria: An Empirical Analysis

Mazeli, Edith Nkiruka (PhD), Madubuike Kenneth O. (PhD), Onehi, Damian Haruna (PhD), Ejinkonye, Remigius Chinwoke (PhD)

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Abstract

This paper assessed the effect of monetary policies on financial intermediation in Nigeria. Background: Monetary policy refers to the set of policies intended to control the amount, cost, and value of money in an economy. There seems to be shallow, limited mechanism and inconsistent monetary policies which makes it unable to effectively achieve mobilization and allocation of resources. Also, the desired macroeconomics objectives through monetary policy seems not to have been sustainable enough. Aims: The specific objectives were to assess the effect of: deposit rate on financial intermediation; lending rate on financial intermediation; liquidity ratio on financial intermediation and deposit ratio on financial intermediation. Methods: This study adopted the ex-post facto research design. Annual time series data was obtained from CBN bulletin and analyzed using descriptive statistics, unit roots test and ordinary least square. The independent variables were: deposit rate (DEPRT); lending rate (LENDRT); liquidity ratio (LIGRT); loan to deposit ratio (LDRT), while the dependent variable was commercial banks loans and advances (CBLA). The hypotheses of this study were tested at 5% level of significance. Results: (1) DEPRT had non-significant effect on CBLA; (2) LENDRT had significant effect on CBLA; (3) LIGRT had non-significant effect on CBLA; (4) LDRT had non-significant effect on CBLA. (5) There was no unit root, the probability (f-statistic) was 0.004654 while adjusted R2 value was 45%. Conclusion: The Central Bank of Nigeria should re-appraise the effectiveness of her monetary policies and ensure their proper execution to achieve the desired goals in the economy.

keywords:

Deposit Rate, Lending Rate, Liquidity Ratio, Loan to Deposit Ratio, Loans and

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