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Download the complete accounting project topic and material (chapter 1-5) titled Effect of Monetary Policy on Financial System here on PROJECTS.ng. See below for the abstract, table of contents, list of figures, list of tables, list of appendices, list of abbreviations and chapter one. Click the DOWNLOAD NOW button to get the complete project work instantly.

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Download the complete accounting project topic and material (chapter 1-5) titled Effect of Monetary Policy on Financial System here on PROJECTS.ng. See below for the abstract, table of contents, list of figures, list of tables, list of appendices, list of abbreviations and chapter one. Click the DOWNLOAD NOW button to get the complete project work instantly.

 

PROJECT TOPIC AND MATERIAL ON Effect of Monetary Policy on Financial System

The Project File Details

  • Name: Effect of Monetary Policy on Financial System
  • Type: PDF and MS Word (DOC)
  • Size: 414KB
  • Length: 34 Pages

CHAPTER ONE

1.0 INTRODUCTION
One of the ways taken by all institute to make the banking sector effective is the use
of the monetary policy introduced by the Federal Government and carried out by the
apex bank of the country Apparently, the existence of an effective banking industry is
vital to every institute and it encourages economic growth and development via its
role in financial interdiction of funds supplies to deflect economic units. This
stimulates international trade, investment economic growth as well employment.
Monetary policy is one of the steps taken by every institute to make the banking
sector effective. Monetary and banking policies are the sole responsibilities of
monetary authority, which comprises of the CBN for the invitation, implementation
and articulation of monetary system. The CBN carried out these duties on behalf of
the Federal government according to CBN decree 21 of 1991 and the banks and other
financial institutions. The guideline are general in operation within a fiscal year but
could be amended on the course of the year. The CBN is equally empowered to direct
the activities of the financial institutions in order to carry out certain duties in
approved monetary policy of which penalties are prescribed for non-compliance with
specific provision of the guidelines.

1.1 BACKGROUND OF THE STUDY
Monetary policy affects financial and economic activities over the year. In other to
appreciate the effects of monetary policy o the banking Industry, it would be wise to
move a review of changing views of monetary policy on the banking industry, it
would be wise to move a review of changing views of monetary influence. Usually
when the quantity of money changes in relation in financial activities as viewed by
fisher (1932). Fisher, take other neoclassical writer who held the view that in short
run, money influences neat cash balances. According to him, when the money stock
increases, example
An increase commodity prices since output and velocity were fixes initially. He
assumed that a rise in commodity prices would exceed the increase in interest rate
which was regarded as a component of a forms operating cost. In the whole analysis,
rise in commodity prices will lead to an increase in a firms profit, demand, money
stock and deposit which will eventually lead to a further rise in investment and
commodity price. The excess reserved for lending will decline with interest rate,
which was stocky earlier.
In the analysis of long term transmission of monetary influence fisher
replaced.‘Interest – investment’ channel with ‘Real cash Balance. He noted that when
wealth rises due to rise in money stock, people tend to reduce their cash balances by
purchasing goods and services since the velocity (V) and output (Y) In fishers
equation of exchange (MUPT) is fixed, the risen money stock (M) cannot lead to
increase holding of goods and services but will lead to decline in prices level (P)
Keynes (1036) accepted the change in money supply relative has both substitution and
considered investment to be quite responsible to interest rates.
Keynes recommended price induce wealth effects, (i.e change in Wealth due to
change in yields) there are ranging accounts by his interpreters about the extent he
integrate them in his general theory. Hence subsequent write to Keynes (i.e Keynesian
or post Keynesian regards the cost of capital interest rate) as the main process by
which changes in money stock. Influence the institute. Thus the change in Volume of
money alters the rate of interest usually approximated by the long term government
bound rate, which effects investment and consumption. Thus the link between Wealth
of private sector and real sectors and consumption was analyzed by Piguo (1974) and
Patikin(1951) in form of real cash balance effect. According to them changes in
quantities of money would affect aggregate. Demand even if they did not alter interest
rate. On the other hand, credit rationing would be controlled by the market forces so
as to ration the supply of credit by non-price mechanism.
Thus an expansionary monetary policy would raise the force of equity (i.e reduce the
yield on equities). The margin between the market evaluation and cost of reproducing
the existing capital goods will stimulate new investment over those goods.
The Non-monetarist argued that monetary policy is as effective as Fiscal policy as to
determine the total spending in the institute in spite of their differences. It holds the
following views.
1. The movement in quantity of money is the most reliable measure of monetary
value
2. Monetary authority can detect the movement in the stock of money overtime
and business cycle
3. Changes in stock money are the primary determination of total spending as
emphasized on Owen’s economic stabilization program
4. Monetary impulse are transmitted to a real institute through an active price
process or profit adjustment process which affect money Financial and real
antes.

1.2 STATEMENT OF PROBLEMS
Despite the establishment of Central Bank of Nigeria (CBN) In 1958, Banking
Industry remained both poor, in adequate in terms of numbers, quality and variety of
service rendered.
The establishment of CBN paved way for adoption of Monetary Management by the
banking Industry. Just incase any analyst is waiting in wings to strike CBN for its
poor monetary Policy performance. Ogwuma (1994:362) offers a defense which says
“A less than objective appraisal of the CBN role in the institute could interpret the
adverse macro-economic trend as evidence of failure on the part of CBN.

1.3 AIMS AND OBJECTIVES OF THE STUDY
The following issues are the main aims and objective of carrying out this study
a. To identify the basic effects of monetary policy in order to achieve a sound
financial system;
b. To examine CBN monetary policy strategies;
c. To Identify the best policy measure for economic stability.

1.3 SIGNIFICANT OF THE STUDY
The important of this study cannot be over emphasize. It will serve as a useful
material to the Monetary Authority, Bank Management and Staff, Customers,
Depositors, Students and indeed the entire Institute on the regards. The report shall be
useful in ensuring both monetary stability and a sound safe and profitable banking
environment which will facilitate the pace for the economic growth and development
in Nigeria.

1.5 HYPOTHESIS/RESEARCH QUESTION
The following hypothesis has been formulated as a guide to the conduct of the study.
They should be tested based on the result obtained from the regression coordinated.
The hypothesis are:
. Ho: Variation in monetary policy does not significantly affect output growth
. Hi: Variation in monetary policy significantly affect output growth
i.e Ho=Null Hypothesis
Hi= Alternative Hypothesis
. Ho: Monetary policy does not develop sound Financial System
. Hi: Monetary policy develops sound Financial System

1.6 SCOPE OF THE STUDY
Although there exist many factors affecting the operation of or the banking industry
affecting the study focuses on the impacts of monetary policy on the performance of
the banking industry.

1.7 LIMITATION OF THE STUDY
It is quite believed that the study of nature needs sufficient time, Finance and
Materials. The inadequate of sufficient factors poses enough imitations to this study.
The Limitations in general include:
a. Financial and monetary constraint;
b. Material constraint;
c. Time constraint;
d. Physical and geographical constraint.

1.8 DEFINITION OF TERMS
Banking Industry
These refer to the total number of banks and other financial institution who performs
banking function such as acceptance of deposit, Issuing of credits/Loan and keeping
of valuables. Such banks include, Merchant Banks and Development Banks etc. The
banking industry also consist of the monetary authorities such as Central Bank of
Nigeria and other Federal bodies whose duty includes the regulation of the institute.
Insurance Bank
This implies those banks whose risks are insured with the Nigeria Deposit Insurance
Commission (NDIC)
Bank Distress
This is the period in banking industry when they cannot be able to meet up its target
such as; Objectives, dividends staff remuneration in the institute as a whole. In this
period, a bank is said to be in the period of solvency i.e a period of when its dept ratio
are high.
A Financial Institution
Is establishments that conduct Financial transaction such as investment, Loans and
deposit. Almost everyone deals with financial institutions on a regular basis.
Everything from depositing money to taking out loan and exchanging currencies must
be done through Financial Institutions.

 

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