Abstract:

This study investigates the effect of monetary policy on the Nigerian Deposit Money Bank System. The Nigerian banking system is currently under-going a series of reforms in order to enhance its competitiveness and efficiency. The Ordinary Least Square (OLS) method is used to examine the effect of monetary policy on the Nigerian Deposit Money Bank System, using such variables as loan and advances (TLA) as dependent variables and liquidity ratio (LR),cash reserve ratio (CRR), monetary policy rate (MPR), average exchange rate (AER) as independent variables. The result of the findings show that the DMB’s Total Loans and Advances are more responsive to changes in cash reserve ratio during the period under study. The study thus recommends, among others, that the regulatory authority Central Bank of Nigeria should create credit procedures, policies and analytical capabilities which should be entrenched in the credit management of DMB’s operations.