Monetary Policies and the Achievement of Bank Profit Objective
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Abstract
Description
Tis study examined the nexus between monetary policy
and the achievement of a bank’s proft objective. Tere have been
lots of arguments about the benefts of monetary policy implementation on deposit money bank’s operations, since the policies have
been seen to impact on their performance. Tis study was carried
out to establish the influence of variables like Liquidity Ratio, Interest and Money supply (M2), which are used as monetary policy instruments, on deposit money bank proftability objective. Te study
covers the period from 2002-2019. Te Auto Regressive Distributed
Lag and Error correction model were adopted in the analysis of the
data. Te study revealed that there was a positive long run relationship between Liquidity Ratio and deposit money bank’s proftability;
there also existed a negative long run relationship between interest
rate and deposit money bank proftability; lastly, there existed a positive long run relationship between Money Supply (M2) and deposit
money bank’s proftability. Based on the fndings, monetary authorities should put in place measures for Liquidity ratio, interest rates
and M
2 implementation to aid deposit money banks operations in
the achievement of their proft objective.
Keywords
H Social Sciences (General), HG Finance