The desire to develop a viable monetary policy has reached it unprecedented limit in the
economy, money as a medium of exchange emerged with the waves to organize a political
and economical institution which will enforce a unique legal tender. Nowadays, money has
played an indispensable role in propelling the activities of the economy.
Monetary policy is the major pre-occupation of the Central Bank of Nigeria (CBN), the
extent to which they enforce their role successfully would depend on the statutory power
conferred on them by the establishing law. It involves the management of the expansion and
contraction of the money in circulation.
Monetary policy may yield better result during period of expansion, prosperity (Boom) and
recession. These policies are more adequate for solving today’s complex economic problems
and have blended very well in tackling contemporary domestic and global economic
Generally, for a sound and prudent enhancement of activities in commercial bank,
coordination of monetary policies can create an integral path for a vibrant economy.
1.1 STATEMENT OF THE PROBLEM
Distress in commercial bank in Nigeria has called for a serious controversial debate, as to
what should be the cause of this distress. A pilot study about this business phenomenon’s
reveals that most of these failures are associated with the monetary policies implemented.
Why then do these policies fail to enhance the corporate culture of banks activities and other
related problem will constitute the statement of this research.
a) The inconsistencies of these monetary policies by the authority: consequence on activities
of commercial banks.
b) The negligence exhibited by some of commercial banks in implementing some of these
policies established by the authority and its adverse effect on the entire system of the
c) The problem of irregular assimilation of information to depositors/borrowers who operate
various accounts with the bank on the authorities directives.
1.2 OBJECTIVES OF THE STUDY
Monetary policies impacts differently on the activities of bank because of their functions in
the money market where majority of Nigerians operates, either as a saver or loan receiver or
both. Besides that, the country’s banking system and overall economy has been affected by
endemic corruption, inadequate infrastructures, political instability and poor macroeconomic
management. It is against this that the purpose of the study is to find out the following:
1. To evaluate the instrumental efficiency of monetary policies on the activities of
2. To investigate the effect of monetary policies on the economy development through
the commercial bank.
3. To investigate the role of monetary policies on commercial banks activities.
1.3 RESEARCH QUESTIONS
1. To what extent has the instruments of monetary policies contributed to the activities of
2. Do the monetary policies have effect on economic development?
3. Is there any relationship existing between monetary policies and commercial banks
1.4 RESEARCH HYPOTHESIS
The hypotheses are based on the stated questions;
1) H0: The monetary policy instruments do not have significant impact on the activities of
H1: The monetary policy instruments have significant impact on the activities of
2) H0: The monetary policies do not facilitate economic development.
H1: The monetary policies facilitate economic development.