HE ROLE OF COMMERCIAL BANK IN ACHIEVING STABILITY IN FOREIGN EXCHANGE
ROLE, COMMERCIAL, BANK, ACHIEVING, STABILITY, FOREIGN, EXCHANGE
He Role Of Commercial Bank In Achieving Stability In Foreign Exchange, Abstract
This Research Project Work Was Undertaken With A Purpose Of
Determining And Evaluation Of The Effect ...
This research project work was undertaken with a purpose of
determining and evaluation of the effect of the Role of Commercial Bank in
Achieving Stability in Foreign Exchange.
The effect of the Role of Commercial Bank on the behavioral aspect
of management information system are Aggression Avoidance and Projection on the
other hand other operational pressures are maintaining the system.
Personal problems in the book-keeping department maintaining book-keeping
Exparching volume of operation’s need to accommodate the
increasing volume need to maintain or reduce cost-unsatisfactory output.
Errors in terms of reports and statement delays in work processing needs or
The study has a library research and empirical study.
Additional information were collected from journals bullies text book and
newspapers etc. it was been clear to me from what I found out that the
Role of Commercial Bank in Achieving Stability in Foreign Exchange plays a very
big positive better information for commercial loan management improve the
speed limit & accuracy of services to customers and also provides necessary
data input for advanced financial information system.
It leads to problem awareness permits feed back on the
implementing of decision. It support problem analysis and selection of
alternatives it influence the choice of the most appropriate option. Also
computer are used in implementing. Strategies or plans for they can also
be used for daring up the budget in constituting investment port failed and in
bank’s balance sheet management.
From the work been mentioned above it is quite clear that if
Nigeria bank continue to encourage the use of the Role of Commercial Bank in
Achieving Stability in foreign exchange would have a better standard of living
& the work of science & technology as regards to computer services.
Background of study
Statement of problem
Objective of the study
Significance of the study
The limitation and study
Definition of terms
The literature review
Research design and methodology
Sources of data
Location of data
Method of data collection
OF THE STUDY
The goal of every government of any country is to achieve
equilibrium in the economic system. It is therefore very important that
the authorities concerned must regulate the system indirectly with the policies.
This necessitates that government of any country must adopt
certain economic policies in order to achieve specific macro-economic goals or
objectives; some of such major macroeconomic polices include: monetary policy
fiscal policies, exchange rate policy. Most of these polices can only be
administered through the agency of commercial banks, which is the pivot of the
research work. In Nigeria, for instance, monetary policy has being
conducted under wide ranging economic environment since the establishment of
the Central Bank of Nigeria (CBN) over many years ago.
Basically, monetary and fiscal policies adopted by the government
of a country is posturing economic development with a view to achieving certain
growth, sustainable balance of payment, maintaining a stable exchange rate of
international competitive levels, combating inflation, price stability and fall
Monetary policy is defined according to CBN briefs (1994) as the
combination of measures designed to regulate the values, supply and cost of
money in an economy. In consonance with the level of economic activities.
Anyanwu (1993;140) refers to monetary policy as a major economic
stabilization weapon which involves measures designed to regulate and control
the volume, cost, availability and direction of money and credit in an economy
to achieve some specified macro-economic policy objective.
Fiscal policy on the other hand, is an attempt by the government
using its expenditure and tax policy to shit the aggregate demand and aggregate
expenditure functions towards desired positions. According to Anwanwe
(1997:241), fiscal policy is taken to refer to that part of government
policies. Concerning the raising of revenue and deciding or the level and
pattern of expenditure for the purchase of influencing economic activities or
attaining some desirable macroeconomic good.
The intricacy in handling the monetary and fiscal policies to
achieve the desired macro-economic objectives necessitates the need for an
independent authority. So in Nigeria today, the Federal Government is the
sole monetary authority, but it has delegated some aspect of the implementation
t o bath the Ministry of Finance and Central Bank of Nigeria (CBN) to
formulate, execute monetary policy; to promote financial system. To achieve
a desired policy objectives, the CBN is empowered to use monetary policy
technique or instruments, and the CBN does most of its functions through the
This technique can be classified into groups: the direct portfolio
contrary and indirect portfolio approach. Indirect portfolio includes:
Open Market Operations (OMO), Minimum Reserved requirements, discounts rate
mechanism. While direct instruments includes: selective credit controls,
credit ceiling and moral suasion.
Furthermore monetary policy presupposed that there is some
relationship between the supply and the demand for money and economic aggregate
such as output, income, savings, general price level and investment. The
mix of monetary policy instruments to be used and its effectiveness depend on
Monetary policies involves monetary management. Monetary
management according to Ojo (1992:3) is defined as the art of controlling the
movement of monetary and credit aggregate in the pursuance of stable price and
sustainable economic growth.
Therefore, the Central Bank or the Central Monetary authority must
attempt to keep the money supply growing at an appropriate rate to ensure
sustainable economic growth, domestic and external stability.
However, in Nigeria, the role of monetary and fiscal policy has in
creases tremendously since after independence. Both civilian and military
governments have adopted there polices to achieve micro-macro objectives.
But despite there measures, to suite the constant changes in the economic
situation of Nigeria still a lot of problems deviled the economy, ranging from
high unemployment, inflation and balance of payments. This prompted me to
research on the topic: “the role of commercial banks in foreign exchange.
1.2 STATEMENT OF PROBLEM
The application of the monetary and fiscal policies by the
monetary authorities using the monetary instruments such as Open Market
Operation (OMO), Bank reserve ration, etc. In consonance with the
prevailing economic situation is aimed at achieving the macro-economic goals of
the country such as full employment, low level of inflation, favourable balance
of payments. But in Nigeria, inspite of these numerous monetary policy
measures adopted, the economy still suffers the problem of higher rate of
unemployment, inflationary pressure, balance of payment deficit and unstable
The questions that follows are: how effective are monetary and
fiscal policies are in controlling some of these variables, inflation in
particular? Why have monetary and fiscal policies failed in our economy
despite that they have worked in other countries?
What may be the reason militating against the effectiveness of the
monetary policies? As the commercial banks are the enzymes used by the
CBN in administering economic measures; what can they do to aid in achieving
foreign exchange stability? In view of the above outlined question, this
research work will try as much as possible to proffer some answers.
1.3 OBJECTIVES OF THE STUDY
This study aims at finding the following:
i. To re-examine the instruments of monetary and
fiscal policies and their performance.
ii. To examine the major policy objectives and their
achievement in the country.
iii. To appraise some monetary and fiscal policies
measures in Nigerian and see how commercial banks respond to their instruction.
iv. To make recommendation to policymakers.
1.4 SIGNIFICANCE OF THE STUDY
This research work is significant because it strives to establish
the relationship of monetary and fiscal policies and the role commercial bank
play in economic stabilization. It is hoped that this work will enhance
and improve the use of monetary and fiscal policies in the realization of
macro-micro economic goals associated with economic growth and development.
1.5 DEFINITION OF TERMS
COMMERCIAL BANKS: Any institution approved by the
central government (usually through CBN) to engage in acceptance of deposits,
charging of bills of payments, and performance of retail banking operations.
FOREIGN EXCHANGE: Refers to transactions in
international currencies emanating from exchange of goods and services between
nations not using common currency.
3.BALANCE OF PAYMENTS:
This shows the estimates in transaction of a country’s visible and invisible
export and import from foreign countries.
4.MACRO ECONOMIC GOAL:
This refers to the aggregation of all resources within a given country in
achieving a stated goal or objective for the economy.
They are governmental policies/instruments used in the stabilization of the
prevailing economic situation.
TERMS AND CONDITIONS APPLY
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