EFFECT OF CENTRAL BANK OF NIGERIA MONETARY POLICY AND COMMERCIAL BANKS PERFORMANCE IN NIGERIA
Abstract
This study investigates the effect of Central Bank of Nigeria (CBN) policies on the performance
of commercial banks in Nigeria, with a specific focus on profitability. The research adopts
secondary data covering the period from 2018 to 2023, utilizing quantitative indicators to measure
CBN policies namely, the Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR), Liquidity
Ratio (LIQR), and Interest Rate (INTR). Bank performance is proxied by Return on Assets (ROA)
and Return on Equity (ROE). The study employs multiple regression analysis to examine the
relationship between these monetary policy tools and the profitability of deposit money banks.
Findings reveal that while certain CBN policies such as the MPR and interest rate significantly
influence profitability, others like the liquidity ratio and CRR display less consistent impacts. The
results underscore the importance of a stable and responsive regulatory environment in enhancing
banking sector performance. The study contributes to existing literature by providing updated
empirical evidence on the role of macro-prudential policies in shaping financial outcomes in
Nigeria’s banking sector. It also offers recommendations for policy formulation and banking
practice, emphasizing the need for consistent and market-sensitive monetary interventions
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