TABLE
OF CONTENTS
TITLE PAGE i
CERTIFICATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS v
CHAPTER
ONE
1.0 INTRODUCTION
1.1 OBJECTIVES OF THE STUDY 4 1.2 SIGNIFICANT OF THE
STUDY 4
1.3 RESEACH METHODOLOGY 6
1.4 RESEACH QUESTION
8
1.5 STATEMENT OF THE PROBLEM 6
1.6 SCOPE OF THE STUDY 8
1.7 DEFINITION OF TERMS 8
1.8 ORGANIZATION OF THE STUDY 11
CHAPTER TWO
2.0
LITERATURE REVIEW 13
CHAPTER THREE
3.0 RESEARCH
METHODOLOGY 21
3.1 SOURCES
OF DATA 21
3.2 METHOD
OF DATA COLLECTION 23
3.3 ANALYSIS
OF DATA COLLECTION 23
3.4 DATA
PRESENTATION AND ANALYSIS 24
3.5 FINDINGS OF THE STUDY 33
CHAPTER
FOUR
4.0 THE HISTORY OF MONETARY POLICY 35
4.1 OBJECTIVES OF THE STUDY 40
4.2 INSTRUMENT USED IN MONETARY POLICY 41
CHAPTER
FIVE
5.0 SUMMARY, CONCLUSION, RECOMMENDATIONS
5.1 SUMMARY 47
5.2 CONCLUTION
49
5.3 RECOMMENDATION 51
REFERENCES 55
CHAPTER
ONE
1.0
INTRODUCTION
In the past year, the Nigeria economy has witness serious micro economy problem, characterized by show in the economic activities, how capacity utilization growing unemployment level debt burden, accelerated inflation intensify exchange rate separation as well as higher perfect receiving of interest rate persistently high and government deficit financing has been identified as the major factors in the observed micro economy problems.
When we talk of micro economy
policies, this deals with monetary and physical policies, but this concerned
mainly on monetary policies.
Therefore, monetary policies comprises of those policies desired to influence the behavious of micro economy preferably the basic aim of the monetary policy are not the monetary aggregate themselves, but the aggregate in the real sector of the economy such as level of output, stabilization and the economy development.
The policies
are designed in an items to charge the trend of some monetary variable in
particular direction so as to infuse the desire behavioral change in the
monetary policies the bank role is to conduct appropriate monetary policies
that is consistence with the main economy objective of achieving real growth in
gross domestic product, low inflation rate and satiable balance of payment
position. This irrespective of whether the direct of indirect approach is put
in place to control money and crudity.
In this
regard, the CBN clatter the amount of monetary supply that is consistent with
the country micro economy objective and manipulated the monetary instrument at
his disposal in order to achieve the state objectives.
Monetary
policy is use to influence the macro economic objective because there is a
believe that this occur in relationship between the trace variable at the
monetary variables.
From the above explanation monetary policy could therefore be define as a delicate action taken by monetary authorities to change the domestic stock of money supply while fiscal policy variable teamain constant.
Monetary policy
influences the level of aggregate income and spending in the economy by
influence money supply and the cost of borrowing money from the bank. It could
also be defined as a policy employing the central bank. It could also be
defined as an instrument for achieving the objective of a general economic
policy or as a tool use by the monetary authority in other to achieve state
economic objectives.
1.1
AIMS AND OBJECTIVES OF THE STUDY
The main objective of the study is to identify
the source of monetary policy and its impact on Nigeria financial institution.
- It is to examine different instrument of monetary policy and how the central bank uses the instrument in control the financial institution in Nigeria.
- We can Endeavour to discuss the tacit and document of the policy in the Nigeria financial institution and the economic as a whole.
- To appraise the performance money policy in Nigeria.
- We end up the work by making adequate conclusion and recommendation on our findings on better ways by which this policy can be properly implemented.
1.2
SIGNIFICANT OF THE STUDY
Presently, the business environment
economy as well as banking industry as experience massive benefits from the
introduction of monetary policy at an appropriate level to ensure sustainable
economy growth and maintain internal and external stability.
The following people will be benefited
from the significant of monetary policy in an economy.
TO THE GOVERNMENT: it enables
government to control monetary supply because it rate of growth has an effect
on inflation.
- It
helps government for dictating course of economy.
- Its
an action which aimed at achieving a
certain set of economy objective also an attempt to control money
TO THE PUBLIC: it brings sustainable economy growth and maintains both internal and external stability growth.
- It
gives aggregate supply of money in calculation and census interest rate.
- Discouragement
inflation with an increase in the along the bank policy guide line.
- It
control the supply of money in circulation whereby too much money used to
purchase few goods
TO THE INVESTORS: it an encouragement
to the investors as the supply of money is been control core with increase in
the volume of purchasing power.
1.3
RESEACH METHODOLOGY
This research was carried out mainly
on Central Bank of Nigeria
plc. the study were conducted basically through personal interview to acquire
some needed information from the staff and management of the bank(CBN).the
research student academic, personal experience central bank annual resorts and
statement of account, various issue was also put to use from the research work.
All these will enable the bank and researchers to carry on this write up, if
the need arises.
1.4
RESEACH QUESTION
Q.1.Does your
bank grants loan and advances to their customers?
Q.2.What is the
type of loan given out mostly?
Q.3.Who is responsible
for giving out of loan?
Q.4.Do you think
that granting of loan and advances to customers have any positive effect on the
economy?
Q.5.Do
you think increasing the rate of granting credit facilities help in improving
the economy?
Q.6.Do your bank
have credit control and management?
Q.7.How efficient
is the credit management and control department?
1.5
STATEMENT OF THE PROBLEM
Despite the
impact which monetary policy has played in the Nigeria financial institution, a
lot of problems still control the monetary policy and their client and this
study therefore carried out to investigate such problem like:
- Expansion
of more commercial bank and liquidation of most financial institution in Nigeria.
- Monetary
supply is not controlled in line with the demand in the real sector which heads
to a situation of disequilibrium.
- This
is adverse effect on recent banking regulation of the liquidity and
profitability objective of banking too low of money supply which leads to hinder
of investment.
- There
is a large non-monetized sector which hinders the success of monetary policy in
such countries – people mostly live in rural areas where barter is practiced.
- Monetary
policy is also not successful in such countries because bank money comprises a
small proportion of the total money supply in the country.
1.6
SCOPE OF THE STUDY
This project work is confined to
reaction period of year which would enable us to analyzed the data collected
properly their project is also limited to use your case study for properly understand
and problem solution of Nigeria
monetary policy and the impact on Nigeria institution.
1.7
DEFINITION OF TERMS
Financial
Institution can be defined as a cooperate financial bodies that provide
financial assistant to all private and public sector for development and
capitalization of the business also to embark on long term capital project.
Monetary
policy is a policy document designed to reputation and controls the volume cost
available and directors of money and credit in economics policy objectives.
Monetary policy refers to the
combination of measures designed to regulate the values, supply and cost of
money in an economy.
Central bank
of Nigeria (CBN) may be defined as the only financial institution established
and charged with the day to day management and control of national monetary
affairs, the supervision and coordination of banking and financial activities
of the country.
Central
banking refers to the role of central monetary authority or an apex financial
institution with one entire financial structure in promoting monetary stability
and financial system through the use of monetary instrument
QUANTITATIVE: this is the
direct control which comprises of open market operation, reserve requirement
and bank rate. These are meant to regulate the level of credit.
QUALITATIVE: this is the
indirect control which includes selective credit control and moral suasion.
These also aimed at controlling specific types of credit and interest rate.
OPEN
MARKET OPEN:
open market operation means the purchase or sale government securities. It buys
government securities in markets in order to increase the money supply on the
other hand when it sells government securities to mop up excess liquidity in
the banking system.
RESERVE
REQUIREMENT:
In Nigeria
all banks are required to maintain two major reserve ratios, a cash and liquid
assets reserves otherwise known as liquidity ratio.
SELECTIVE
CREDIT CONTROL:
the central bank of Nigeria
instruct banks on a sectored allocation of credit and ….. Ability and bank are
expected to comply.
BANK
RATE:
Bank rate is the rate of interest charged by the control bank for discounting
bill. It is a penal rate in the sense that it is always above t he rate at
which the bill are discounted.
MORAL
SUASION:
Refer to a whole series of action that the Central Bank may take to influence
the lending practitioners of commercial bank and sometimes other lenders.
INTEREST
RATE:
This is the rate which bank charge on loan or advance given to the customers,
its determine by the bank rate.
1.8
ORGANIZATION OF THE STUDY
This research
work of this study will be divided into five chapters.
Chapter one, includes
introd1uction, aim and objection, significant of the important, statement of
the problem, scope and limitation, definition of term and finally plan of the
study.
Chapter two is
based on avoidance of literature relating to the topic question (monetary
policy and its impact of Nigeria Financial Institution).
Chapter three
clearly examines research methodology, source of date, method of data collection,
analysis of data collection and finding of the study.
Chapter four, this vividly takes a look at the history of monetary policy and the objective of the policy also the instrument used in monetary policy and finally effect of monetary policy on financial institution.
Chapter five, this chapter contains summary, recommendation and conclusion.
EFFECT OF OPEN MARKET OPERATIONS AS TOOL OF MONETARY POLICY OF THE CENTRAL BANK OF NIGERIA IN CONTROLLING THE ECONOMY A case study of central bank of Nigeria with a special references to the period of 2005 – 2010 (A CASE STUDY OF CENTRAL BANK OF NIGERIA PLC)
