Dynamics of Monetary Policy on Performance of Deposit Money Banks in Nigeria

Abstract

The study examined dynamics of monetary policy on performance of deposit banks in Nigeria. The objectives of the study were to examine the effect of money supply, exchange rate, interest rate on the performance of banks. The research design adopted in this study is the exploratory design to identify the factors that contribute to monetary policy in controlling profitability in Nigeria. Secondary sources of data were used as the main method of data collection. The relevant data for this study have been obtained from the Central Bank of Nigeria (CBN) statistical bulletin. The data were collected on annual basis from 1990-2019. The study employs desk survey. Data were gotten from Statistical Bulletins of the Central Bank of Nigeria. Other information was sourced from relevant journals and textbooks. Ordinary least square of multiple regression statistical technique was employed to establish the relationship between dependent and independent variables. Based on the analysis, the findings revealed that there was a positive and significant effect of money supply on profitability, there was a positive and significant effect of exchange rate on profitability, and there was a negative and significant effect of interest rate on profitability. The study recommended that more emphasis should be placed on money supply, hence it has much influence in profitability of banks in Nigeria. Therefore, government should ensure that money supply is just sufficient to stimulate non-profitability sustainable economic growth.