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

Received: 15 February 2021     Accepted: 2 March 2021     Published: 14 May 2021
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Abstract

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.

Published in Journal of Finance and Accounting (Volume 9, Issue 3)
DOI 10.11648/j.jfa.20210903.11
Page(s) 60-66
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Monetary Policy, Asset Management, Deposit Money Banks

References
[1] Abata, M. A. (2015). Impact of asset management corporation of Nigeria (AMCON) on the securitisation in the Nigerian banking sector. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics (GJCRA), 1 (2), 282-298.
[2] Adegbite, F. F., & Dada, O. T. (2018). Risk assets management, liquidity management and sustainable performance in Nigeria Deposit money banks. International Journal of Accounting Research, 6 (2), 1-10.
[3] Adegbite, F. F., Asaolu, T. O., & Enyi, E. P. (2013). Distress resolution in Nigerian banking sector: The role of assets and liabilities management. International Journal of Financial Research, 4 (3), 70-82.
[4] Ajayi, F. O., and Atanda, A. A. (2012). Monetary policy and bank performance in Nigeria: A two-step cointegration approach. African Journal of Scientific Research, 9 (1), 463-476.
[5] Ajibola, J. O. (2016). The effects of assets and liability management on financial performance of some selected Nigerian banks. Journal of Accounting and Financial Management, 2 (2), 44-63.
[6] Ayogu, M. D., and Emenuga, C. (2009). Central banking experience and the conduct of monetary policy in Nigeria. African Economic Research Consortium, Financial Market Working Papers 1-17.
[7] Brima, S., and Brima, A. S. (2017). Monetary policy effects on private sector investment: Evidence from Sierra Leone. International Journal of Economics and Financial Issues, 7 (1), 476-488.
[8] Central Bank of Nigeria (2014). Instruments of monetary policy. CBN Educational Series.
[9] Dare, D., & Okeya, I. O. (2017). Monetary policy and commercial banks’ credit performance: Evidence from UBA PLC. Journal of Economics and Finance, 8 (4), 60-69.
[10] Ibeabuchi, S. N. (2007). Overview of monetary policy in Nigeria. Central Bank of Nigeria Economic and Financial Review, 45 (44), 15-37.
[11] Jegede, C. A. (2014). Effects of monetary policy on the commercial banks lending in Nigeria. Review of Public Administration and Management, 3 (5), 134-146.
[12] Mishra, P. K., and Pradhan, B. B. (2008). Financial innovation and effectiveness of monetary policy. http://ssrn.com/abstract=1262657.
[13] Odufuye, B. M.. (2017). Bank credits and its impact on Nigerian economic growth. International Journal of Development Strategies in Humanities, Management and Social Sciences, 7, 3.
[14] Obioma, J., and Onyebueke, C. (2018). Bank Asset Quality Performance among Nigerian Banks - The Role of Monetary Policy. IIARD International Journal of Banking and Finance Research, 4 (1), 1-131.
[15] Ogbulu, O. M., and Torbira, L. L. (2012). Monetary policy and the transmission mechanism: Evidence from Nigeria. International Journal of Economics and Finance, 4 (11), 122-133.
[16] Okafor, P. N. (2009). Monetary policy framework in Nigeria: Issues and challenges. CBN Economic and Financial Review, 33 (2).
[17] Okoro, A. S. (2013). Impact of monetary policy on Nigerian economic growth. Prime Journal of Social Science (PJSS), 2 (2), 195-199.
[18] Okpara, G. C. (2010). Monetary policy and stock market returns: Evidence from Nigeria. Journal of Economics, 1 (1), 13-21.
[19] Okpara, G. C. (2009). A synthesis of the critical factors affecting performance of the Nigerian banking system. European Journal of Economics, Finance and Administrative Sciences, 17, 34-44.
[20] Omankhanlen, A. E., Okorie, U. E., & Niyan, T. J. (2015). A dynamic analysis of the relationship between monetary policies and loan risk exposures in Nigerian deposit money Banks. Mediterranean Journal of Social Sciences, 6 (6), 247-255.
[21] Onoh, J. K. (2002). The dynamics of money, bank and finance in Nigeria: An emerging market. Aba: Astra Meridian Publishers.
[22] Sanusi, S. L (2011). Banks in Nigeria and national economic development: A critical review. Being a keynote address at the Seminar on “Becoming an economic driver while applying banking regulations” organised by the Canadian High Commission in joint collaboration with the Chartered Institute of Bankers of Nigeria (CIBN) and Royal Bank of Canada (RBC) on March 7. Research Department, Abuja, CBN.
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Cite This Article
  • APA Style

    Olofinlade Samuel Oluwapelumi, Aremu Olusegun Samuel, Ogunwole Cecilia Oluwakemi Aina. (2021). The Impact of Monetary Policy on Assets Management of Deposit Money Banks in Nigeria. Journal of Finance and Accounting, 9(3), 60-66. https://doi.org/10.11648/j.jfa.20210903.11

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    ACS Style

    Olofinlade Samuel Oluwapelumi; Aremu Olusegun Samuel; Ogunwole Cecilia Oluwakemi Aina. The Impact of Monetary Policy on Assets Management of Deposit Money Banks in Nigeria. J. Finance Account. 2021, 9(3), 60-66. doi: 10.11648/j.jfa.20210903.11

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    AMA Style

    Olofinlade Samuel Oluwapelumi, Aremu Olusegun Samuel, Ogunwole Cecilia Oluwakemi Aina. The Impact of Monetary Policy on Assets Management of Deposit Money Banks in Nigeria. J Finance Account. 2021;9(3):60-66. doi: 10.11648/j.jfa.20210903.11

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  • @article{10.11648/j.jfa.20210903.11,
      author = {Olofinlade Samuel Oluwapelumi and Aremu Olusegun Samuel and Ogunwole Cecilia Oluwakemi Aina},
      title = {The Impact of Monetary Policy on Assets Management of Deposit Money Banks in Nigeria},
      journal = {Journal of Finance and Accounting},
      volume = {9},
      number = {3},
      pages = {60-66},
      doi = {10.11648/j.jfa.20210903.11},
      url = {https://doi.org/10.11648/j.jfa.20210903.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20210903.11},
      abstract = {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.},
     year = {2021}
    }
    

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  • TY  - JOUR
    T1  - The Impact of Monetary Policy on Assets Management of Deposit Money Banks in Nigeria
    AU  - Olofinlade Samuel Oluwapelumi
    AU  - Aremu Olusegun Samuel
    AU  - Ogunwole Cecilia Oluwakemi Aina
    Y1  - 2021/05/14
    PY  - 2021
    N1  - https://doi.org/10.11648/j.jfa.20210903.11
    DO  - 10.11648/j.jfa.20210903.11
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 60
    EP  - 66
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20210903.11
    AB  - 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.
    VL  - 9
    IS  - 3
    ER  - 

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Author Information
  • Department of Finance, Faculty of Management Sciences, Ekiti State University, Ado-Ekiti, Nigeria

  • Department of Banking and Finance, Faculty of Financial Management Studies, The Polytechnic, Ibadan, Nigeria

  • School of Business, University of Ibadan, Ibadan, Nigeria

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