Thesis Abstract

Abstract
Monetary policy plays a crucial role in regulating the economy of a country, and one of the key instruments used is credit guidelines. This study aims to evaluate the effectiveness of credit guidelines as an instrument of monetary policy in Nigeria. The research will analyze the impact of credit guidelines on key economic indicators such as inflation, interest rates, and economic growth. By examining historical data and conducting regression analysis, the study will assess the extent to which credit guidelines have influenced the economy in Nigeria. The research will also investigate the implementation of credit guidelines by the Central Bank of Nigeria (CBN) and commercial banks in the country. By examining the policies and procedures governing credit guidelines, the study will provide insights into the effectiveness of these guidelines in achieving the objectives of monetary policy. Additionally, the research will explore the challenges and limitations faced in implementing credit guidelines, such as issues related to credit allocation, risk management, and regulatory compliance. Furthermore, the study will compare the effectiveness of credit guidelines with other monetary policy instruments used in Nigeria, such as open market operations and reserve requirements. By analyzing the relative impact of these instruments on the economy, the research will provide valuable information on the optimal mix of policies for achieving macroeconomic stability and promoting sustainable economic growth in Nigeria. Overall, this research aims to contribute to the existing literature on monetary policy in Nigeria by providing empirical evidence on the effectiveness of credit guidelines. The findings of this study will have important implications for policymakers, central bankers, and financial institutions in Nigeria, as they seek to design and implement effective monetary policy measures to achieve their economic objectives. By enhancing our understanding of the role of credit guidelines in the economy, this research will help to inform future policy decisions and promote financial stability and economic development in Nigeria.

Thesis Overview

INTRODUCTION

1.1                        BACKGROUND OF THE STUDY

One important factor affecting the level of economic activities in any economy is change in supply.  These changed affects directly the rate of spending by the citizen of the country.  It is therefore, because of the economic importance of monetary that the monetary authorities has devoted time and resources towards money management with a view of reaping the benefits inherent therein.

The credit guideline, which is my topic of study, has formed the apex instrument used by monetary authorities in Nigeria to influence economic activities.  The guidelines are informed of central bank of Nigeria monetary policy circulars prescribing sectoral and aggregate increase and decreasing in credits by the commercial and merchant banks.

According to Anyanwu J.A. (1998) the credit guidelines can be used to regulate the pace and content of economic in an economy. This involves authorities interference with the volume and direction of credit by the commercial and merchant banks to those sectors of the economy.  This is why the government divided the economy into major sectors, the preferred or high priority sector and the less preferred or high priority sector and the less preferred or “others” sector.

The preferred sector comprises of agricultural industrial or manufacturing enterprises residential building construction, exports and essentials services sub-sectors.

The government has since the introduction of the credit guidelines in 1964, being urging banks to grant more credit facilities to this sector or order to boost the rate of economic development in the country.  The less preferred sector of the economy also comprises of general commerce, government and “others”.  Government also urges the banks to allocate less funds or exercise restraint in granting loans and advances to this sectors because of the affects it this sectors because of the affects it would have no the general price level.