ABSTRACT
The economic policies or interpretation of such policies has
always left a key question unanswered, how much authorities do such policies
allow the banks to use their powers to lend, to made remarkable impact in the
overall economic situation in the country.
Like in banks in most developing economic (Nigeria inclusive) the
role of providing advice and issuing financial directives lies in the ministry of
finance, the Nigeria deposit insurance corporation and the central bank of
Nigeria. The federal government relies on these institution for the
proper functioning of banks through their monetary policies, which could be
concretionary or expansionary. This invariably affects the commercial banks
etc. hence the need for this study.
The Zenith Bank Plc has been chosen in this regard and except
where specified individually, banks becomes the terminsnolyg. In this study in
depth study is made on how the Apex Banks, the CBN’s financial monetary
policies affectS commercial banks.
Chapter one of the study deals on the back ground, study of the
problems. Statement of hypothesis and what significant of the study is.
Second chapter studies the literature used.
The chapter three emphasis on the techniques and sample collection
and questionnaire chapter four presentation of data analysis of the data and
the interpretation of finding the last chapter five elucidates on the findings
and solutions were proffered. Hence given rise to conclusion.
TABLE OF CONTENT
CHAPTER ONE
Introduction
1.1 Background of the study
1.2 Statement of problems
1.3 Objective of the study
1.4 Significance of the study
1.5 Statement of hypothesis
1.6 Scope and limitation of study
1.7 Definition of terms
CHAPTER TWO
Literature review
2.1 2004 monetary policy and the introduction
of N25 billion capital base.
2.2 Monetary and credit policy measure in 2012
2.3 Frame work for determine bank cost of funds
2.3.1 National
saving certificate
2.3.2 Federal
government development stocks
2.3.3 Minimum
balance on loan saving account
2.3.4 Money
Transfer
2.3.5 Policy
on SMES
2.3.6 CBN
rediscounting and refinancing
2.3.7 Characteristics
of promissory note
2.3.8 Paid
up capital requirement
2.3.9 Moral
suasion
2.3.10 Improvement in the payment system
2.4 Universal banking practice
2.5 Basic principles of commercial banks credit
2.6 Credit policies of commercial banks
2.7 Factors that determine credit policies in Nigeria
2.8 Capital position of the banks
2.9 Liquidity and profitability
2.10 Impact
of CBN monetary policy on banks profit.
CHAPTER THREE
Research design and methodology
3.1 sample survey method
3.2 Population sample for the study
3.3 Sources of data collection
CHAPTER FOUR
Data presentation
4.1 Data analysis, interpretation
4.2 List of hypothesis
CHAPTER FIVE
Findings conclusion and recommendation
5.1 Summary of findings
5.2 Conclusion
5.3 Recommendations
Bibliography
Appendix
Questionnaires
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Most banking activities are directed towards lending as credit has
remained the backbone of banking operations. It is due to the fact that it
provide the bulk profits.
Today, its vital role in commercial banking activities lie in the
direct it has on total economic growth and business development. Every year the
(CBN) central bank of Nigeria being the monetary authority that is solely
responsible for the insurance of guidelines policies and the interpretation of
such, comes up with economic measure roles and regulation under which the bank
in the country operate. Such policies direct the use of funds from depositors,
stockholders, and creditors in order to control the size of loan portfolio
thereby determining the general circumstances under which it is appropriate to
make an advance. The monetary policies also aim at aiding the banks to maintain
a sound financial and banking system promote confidence in sustenance of
reasonable banking services for public as well as ensuring a high standard of
conduct and professionalism in banking industry. These rules and regulations
are contained in monetary policy circular being issued by the central bank at
the beginning of every year.
The techniques of monetary policies could be broadly divided into
two namely:
Direct and Indirect.
While the direct approach has been used very extensively in the
more developed market economic, the indirect approach predominate in the less
developed economics such as Nigeria. Nonetheless, both technology aim at
influence the cost and availability of banking system’s credit. The direct
system techniques involves fixing of credit ceiling and interest weight rates
the Apex Bank (CBN) for compliance by banks, while the direct approach achieves
the same objective through the financial market. The most potent instrument of
the indirect monetary policy technique is the open market operation (OMO). It
is worthy of note that effort aimed at introducing incorrect monetary and
credit-control anchored on the use of OMO are themselves a parts of the given
receipts which they would present to the gold smith on withdrawal.
According to Paul Sammuelson, (1990-20) money has an anonymous
quality making are dollar just as good as another. In relation to the above the
goldsmiths recognized that not all depositors of gold when they come back at
the same time to collect them. These receipts signified time to collect them.
These receipts signified debt and were transferable. Out of the gold deposited,
the goldsmith started to lend out part of them and charge a fee for these
services.
Hence the evolution of our bank lending. As development continued
to surface in the society it become possible for financial institution to
emerge and act as bank where people go to deposit their money and other
precious metals for future withdrawals and most importantly lending money to
the users of fund. Bank lending has ever since then been on the increase with
different hierarchy of operations.
1.2 STATEMENT OF THE PROBLEM
Monetary policies are organized and established system of
administration of loan, and its disbursement have so many loopholes which
undermine its base exercise and guidance. It is a statement that need not be
overemphasis.
These policies being one out of measure used by that nation
ability to mobilize and channel its scare resources to different sectors
of the economy. Therefore when these economic policies are seemingly deficient,
it poses a big question which needs to be answered. How much authority do such
policies allow the banks to use their powers to lend to make remarkable. Impact
on the overall economic positions on themselves (hence profit). A major
conclusion has been that effective implementation through the financial
intermediation will serve a machinery for economic progress and profit enhance
ability.
Apart from the explicit policies which are extremely imposed by
the CBN implicit rules and regulations are also developed by the bank to guide
their internals operations.
But these guidelines are developed from the mature of banking
industry. Generally, these policies have three implications. One to the banks
to the borrowers and to the economy. Emphasis is laid here on the
implication it has on the banks.
Banks lending dates bank to the days when the hold smiths accepted
deposits from the merchants, mostly gold and valuable for safe keeping. At
first such establishment were simply like ware house. Depositors were central
bank of Nigeria towards the maintenances of prudent banking have fare reading
effects on banking and the Zenith bank Plc in particular. The question
therefore arises what effect do these policies have on commercial banks,
customers and the economy? Are these policies and conditions too strength as to
constitute a problem to lending?
Do commercial banks ensure full compliance to the monetary
policies circular?
Are there government objective for introducing these
rules and regulations being achieved?
The CBN’s guidelines, rules and regulation normally contained in
the monetary policy circular have always been aimed at achieving targeted
goals. The commercial banks which are expected to operated to operate under the
guidance of the regulations of the CBN have also their own internal lending
policies objectives to achieve. All these pose a lot of problems to the bank’s
credit decisions worthy of note is the CBN directive that lending should not
exceed and foreign transfer to individual should not exceed N1,000,000 and
corporate bodies N5,000,000. this has made of possible for banks to have loan
or credit dispersal and control money laundering. Based on the above a
performance evaluation of the effect of these policies is inevitable to finding
out the resultant effect on banks activities using the 2011 and 2012 monetary
policies.
1.3 OBJECTIVES OF THE STUDY
The purpose of this research work is to undertake an in depth
analysis of the effect of the various guidelines introduced for banking
operations by the Apex monitoring authority on the banks using Zenith bank Plc
as case study. Other objective include:
i. Assessment of the extent to which
commercial banks have been able to comply with statutory allocation of credit
to the different sectors of the economy through the CBN credit to the different
sectors of the economy through the CBN guidelines.
ii. Whether the commercial banks
have been able to maintain the credit ceiling and how far interest rate
deregulation contain in policy has been able to affect the volume of banks
lending.
iii. To test the rigidity of the policies
and its effects on the borrowing customers.
iv. To draw outlines of credit
offered by these banks and their appraisal process highlighting the
environmental influence that impinge on the monetary policy practices in
Nigeria.
v. Lending is of paramount importance in the
economy hence the research work will investigate lending policies and practical
of the banks system in the country funding out how realistic they are in line
with the nations economic settings.
Making recommendation where necessary and suggesting ways to
ensure effective implementations of these policies to achieve the desired
objectives.
1.4 SIGNIFICANCE OF THE STUDY
Government over the year have made inspiring calls to all citizens
be self reliant and in a bid to achieve this loan to rural borrowers have been
increased to 50% and as well sectored allocation (SMES) small scale and medium
enterprises as well as according priorities to key sector of the economy.
This research work being an appraisal of the impact of monetary
policies on Nigeria commercial banks (Zenith) precisely will enable the
apex bank restructure and relax the assumed stringent measure in order to make
it possible for necessary assistance from banks.
However, the primary motive for any corporate business is for
profit optimization and the maximization of shareholders health banks are no
exception. From this research, they will realize that proper
implementation of monetary policies can ensure higher profitability of the
banking industry. To borrowing customers, they will deduce some act inherent in
loan defaulting an what are the causes of high interest rates and their
remedies. This implies that of they continue borrowing funds without paying
back, this banking industry may in future become liquid which will result in
high interest rate and subsequently high cost of borrowing fund. It will also
constitute guide towards future design and formulation of lending policies by
the monitoring authority through the implementation of recommended measure.
Finally, this work will be of immense help to other university
undergraduates who will like to writ on this topic as well as exposing to
monetary policies available to the commercial banks in Nigeria.
1.5 STATEMENT OF HYPOTHESIS
For a sound and valid investigation, the under listed hypothesis
have been formulated and the validity will be tested in chapter four using
appropriate statistical data.
HYPOTHESIS I
Ho: The implementation of CBN policies have shown adverse effect
on commercial banks.
Hi: The commercial banks have shown fall compliance with CBN
guidelines on the allocation of credit to the high priority sector.
HYPOTHESIS II
Ho: The commercial banks have shown fall compliance with CBN
guidelines on the allocation of credit to the high priority sector.
Hi: The commercial banks have shown fall compliance with CBN
guidelines on the allocation of credit to the high priority sector.
HYPOTHESIS III
Ho: There is no significant difference between the volume of
lending by commercial banks in interest rate regulated
economy and one of interest rate
deregulation.
Hi: There is no significant difference between the volume of
lending by commercial banks in interest rate
regulated economy and one of interest rate
deregulation.
1.7 DEFINITION OF TERMS
monetary policy:
Is a policy that deals with discretionary control of money supply
by the monitoring authorities in order to achieve stated economic goals.
PROFITABILITY
This is the excess of enterprises returns over its
expenditure.
LENDING POLICY:
The establishment of directives and other use of the funds from
stockholders, depositors and other to control the composition and size of the
loan portifolio and the circumstances under which it is appropriate to make a
loan., specifically, it is designed and is contained in the current monetary
policy.
CENTRAL BANK
The Apex bank in Nigeria to which has been entrusted the
supervision of issuing guidelines and monitoring of banking operations.
FINANCIAL SYSTEM
The Nigeria financial system is made up of the supervisory and
regulatory bodies.
i. The banking system
ii. Non bank financial institution.
iii. The financial markets. Anyanwokoro
(1999:150)
BANK
A bank is a corporate organization that has been licensed by the
central body after satisfying the required procedure and demands to work as a
bank thereby receiving time deposit. Savings and current to act under the
dictates of the constitution.
LENDING
A facility offered by a bank to its customers or non
customers on the ground that such a facility will be returned with the
principal and interest when due.
EFFECTIVE LENDING
A question of lending which maximizes the banker’s objectives of
development.
FINANCIAL INTERMEDIATION
This is a process by which financial institution accept deposit
from the excess householders and lend some to the deposit deficit sectors.
NDIC
Nigeria Deposit Insurance Corporation which was established under
decree no 2 of 1998 and commenced operation in March 1989 as a primary
corporation responsible for providing insurance cover to the deposit of
depositors in a licensed bank and when appropriate grant assistance to such
banks when in financial difficulty. The NDIC is generally in control of
distressed banks to ensure that depositors are compensated commensurately.
Department | Banking and Finance |
Project ID Code | BFN0241 |
Chapters | 5 Chapters |
No of Pages | 65 pages |
Methodology | Chi Square |
Reference | YES |
Format | Microsoft Word |
Price | ₦4000, $15 |
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Contact Us On | +2349067372103 |
Contact Us On | +2349094562208 |
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