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PROJECT TOPIC: THE IMPACT OF MONETARY POLICY ON THE PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

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CHAPTER ONE

1.0   INTRODUCTION

1.1   BACKGROUND OF THE STUDY

The banking sector is largely dominated by commercial banks and by far the most important in any developing countries like Nigeria. Globally, the unique role of banks as the engine of growth in any economy has been widely acknowledged (Adegbaju and Olokojo, 2008; Kolapo, Ayeni and Oke, 2012; Mohammed, 2012). In fact, the intermediation role of banks can be said to be a catalyst for economic growth and development as investment funds are mobilized from the surplus units in the economy and made available to the deficit units. In doing this, banks provide and array of financial services to their customers. It can therefore be said that the effective and efficient performance of the banking industry is an important foundation for the financial stability of any nation. The extent to which banks extend credit to the public for productive activities accelerates the pace of a nations economic growth as well as the long-term sustainability of the banking industry (Kolapo Ayeni, and Oke, 2012; Mohammed, 2012). Similarly put, the banking institution occupies a vital position in the stability of the nation’s economy, it plays essential roles on fund mobilization, credit allocation, payment and settlement system as well as monetary policy implementation (Mohammed 2012).  In performing these functions, it must be emphasized that banks in turn promote their own performance. In other words, deposit money banks usually mobilize savings and extend loans and advances to their numerous customers bearing in mind, the three principles guiding their operations, which are profitability, liquidity and safety (Okoye and Eze, 2013). In Nigeria, Imala (2005) stated that the main objective of the banking system are to ensure price stability and facilitate rapid economic development through their intermediation role of mobilization savings and inculcating banking habit at the household and micro enterprise levels.


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