The Impact of Monetary Policy on Assets Management of Deposit Money Banks in Nigeria

摘要

The study investigated the impact of monetary policy on assets management of banks in Nigeria which has been an issue that has gained momentum among scholars of repute. Different relevant empirical reviews were carried out. The study specifically addressed the effect of monetary policy rate, liquidity rate and cash reserve requirement on banks asset management for the period of 37 years which spanned from 1981 through 2017. While secondary data were sourced from the Central bank of Nigeria Statistical bulletin and National Bureau of Statistics. However, Vector Error correction (VECM) econometric techniques approach was applied on the secondary data. It employed this econometric technique on unit root test to establish the stationarity of the variables and the macroeconomic variables used were not stationary at level hence the study proceded to first difference where the macroeconomic variables used became stationary at the first order. The result from Johansen Co-integration reveals that monetary policy rate and cash reserve requirement have significant and positive effect on bank asset management while liquidity rate had an insignificant negative effect on bank asset management. The study concluded that monetary policy has a significant effect on bank asset management in Nigeria. It was recommended that 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.