ASSESSMENT OF MONETARY POLICIES EFFECT ON NIGERIA COMMERCIAL BANK (A CASE STUDY OF ZENITH BANK PLC)
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BACKGROUND OF THE STUDY
Credit has remained the backbone of banking operations, hence the majority of banking activities are focused on lending. It is because it provides the majority of the profits. Today, its importance in commercial banking activities stems from the direct impact it has on overall economic growth and corporate development. Every year, the (CBN) central bank of Nigeria, as the monetary body exclusively responsible for the insurance of guiding policies and their interpretation, develops economic measure responsibilities and regulations under which banks in the nation operate (Emekekwue 2017). These rules guide the use of funds from depositors, investors, and creditors to manage the growth of the loan portfolio, therefore specifying the broad circumstances under which an advance is appropriate. Monetary policies also seek to assist banks in maintaining a healthy financial and banking system, increase public trust in the provision of acceptable banking services, and ensure a high level of conduct and professionalism in the banking business. These rules and regulations are outlined in the central bank's monetary policy circular, which is released at the start of each year.
Monetary policy strategies may be roughly classified into two types: direct and indirect.While the direct strategy has been widely adopted in more established market economies, the indirect approach is more prevalent in less developed economies such as Nigeria. Nonetheless, both technologies try to impact the cost and availability of credit in the banking sector. The direct system tactics entail the Apex Bank (CBN) establishing loan ceilings and interest weight rates for compliance by banks, whereas the direct approach accomplishes the same goal through the financial market. The open market operation is the most powerful weapon of the indirect monetary policy strategy (OMO). It is worth noting that the efforts aimed at creating inaccurate monetary and credit-control mechanisms based on the usage of OMO are themselves components of the provided receipts that they would submit to the goldsmith upon withdrawal.
According to Ugwuanyi (2017), money has an anonymous aspect that makes one dollar equal to another. In regard to the foregoing, goldsmiths understood that not all gold depositors return at the same time to collect their gold. These receipts indicated that it was time to collect them. These receipts represented debt and could be transferred. The goldsmith began to lend out a portion of the gold deposited and collect a fee for these services.
As a result, our bank lending has evolved. As civilization progressed, it became feasible for financial institutions to arise and operate as banks where individuals could store their money and other precious metals for future withdrawals, as well as lending money to finance users. Since then, bank lending has increased with a distinct hierarchy of operations.
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