Central Bank of Nigeria Contemporary Monetary Policy and Banks Profitability: An ARDL Approach
No Thumbnail Available
Date
2018-12
Authors
Odior, E.S.O.
Ejedegba, R.U.
Journal Title
Journal ISSN
Volume Title
Publisher
Sokoto Journal of the Social Sciences
Abstract
This study examines effects of the Central Bank of Nigeria (CBN) monetary policy on the profitability of commercial banks in Nigeria. The study was based on country aggregate level annual data that covered a period of 35 years, 1980-2014. Methodologically, the study use a multivariate regression analysis under an econometric framework. The results show that monetary policy rate, cash reserve ratio and exchange rate annually, cause a long and short run increase on banks profitability, while, treasury bill rate and liquidity ratio annually, cause a long and short run decrease on banks profitability. Also, this study revealed that the long run impacts of the CBN monetary policy on banks profitability are similar to the short run impacts. The implication of the findings suggests that the profitability of the banking sector is not a function of banks charges through high lending rates as against maximum rates as their circumstances may allow only, but also, changes in monetary policy This study therefore recommends that, monetary authorities should adopt monetary policies that will help Nigerian deposit money banks to improve on their profitability and there is need to review and strengthen bank lending rate policies through effective and efficient regulation and supervisory framework.
Description
Keywords
CBN , Monetary Policy , Bank Profitability
Citation
Odior, E. S.O & R. U. Ejedegba (2018), Central Bank of Nigeria Contemporary Monetary Policy and Banks Profitability: An ARDL Approach: Sokoto Journal of the Social Sciences, Faculty of Social Sciences, Usmanu Danfodiyo University, Sokoto, Vol. 8. No 3, Pp, 139 – 160