Monetary Policies and the Achievement of Bank Profit Objective
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This study examined the nexus between monetary policy
and the achievement of a bank’s profit objective. There have been
lots of arguments about the benefits of monetary policy implementation
on deposit money bank’s operations, since the policies have
been seen to impact on their performance. This 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 profitability objective. The study
covers the period from 2002-2019. The Auto Regressive Distributed
Lag and Error correction model were adopted in the analysis of the
data. The study revealed that there was a positive long run relationship
between Liquidity Ratio and deposit money bank’s profitability;
there also existed a negative long run relationship between interest
rate and deposit money bank profitability; lastly, there existed a positive
long run relationship between Money Supply (M2) and deposit
money bank’s profitability. Based on the findings, monetary authorities
should put in place measures for Liquidity ratio, interest rates
and M2 implementation to aid deposit money banks operations in
the achievement of their profit objective.
Keywords
H Social Sciences (General), HF5601 Accounting