THE IMPACT OF MONETARY POLICY ON COMMERCIAL BANK

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Basically, a bank has a two-fold function in connection with receiving deposits and making loans, there are many services that bank render which are fundamental important to normal function of our economic system. For example, bank provide a safe place for the deposits of fund, which temporarily are not needed by their owners, through the bank services in changing money, individual may obtain currency of coin, in the denomination desired. Also through cheques, depositors can pay their bills, reducing carrying of money from place to place, thereby minimizing risks. The banks also assist in the book keeping operations of his depositor record of both cash and credit funds received and disbursed and equally rendering receipts in the form of cancelled cheques for bill discharged.

Banks equally assist in facilitating credit transaction through their services to customer in obtaining information with regard to the financial responsibility of prospective purchased of the customer goods and services. Finally, banks grant loans to individuals, merchant, manufacturer, and others. A banking service made possible by the accumulated funds of depositors and the ability of banks to create money and use the same money created to make profit, which is the aim of going into business.

  If these services aim at making profit is received by the public without interruption, the banks of the country must be managed wisely. The management of an individual’s bank represented by its board of directors and its executive officer must be familiar with banking practices and procedures. They must have a