Project Abstract

Abstract
Monetary policy is a crucial tool used by governments and central banks to manage and stabilize the economy. In the context of the Nigerian economy, the effectiveness of monetary policies has been a subject of interest and debate among policymakers, economists, and researchers. This research aims to assess the effectiveness of monetary policies in the Nigerian economy by analyzing the impact of key monetary policy instruments such as interest rates, reserve requirements, and open market operations on key economic indicators such as inflation, exchange rates, and economic growth. The methodology employed in this research involves a comprehensive analysis of data collected from various sources including the Central Bank of Nigeria, World Bank, and other relevant institutions. Econometric models such as Vector Autoregression (VAR) and Granger Causality tests are used to analyze the relationship between monetary policy variables and economic indicators. The research also considers the impact of external factors such as global economic conditions and oil prices on the effectiveness of monetary policies in Nigeria. The findings of this research contribute to the existing literature on monetary policy effectiveness in developing economies like Nigeria. The results indicate that monetary policies have a significant impact on key economic indicators in Nigeria, with interest rates and exchange rates showing a strong relationship with inflation and economic growth. However, the effectiveness of monetary policies in Nigeria is influenced by various factors including the structure of the economy, external shocks, and the credibility of the central bank. The implications of the research findings suggest that policymakers in Nigeria need to carefully design and implement monetary policies that consider the unique characteristics of the Nigerian economy. Improving the transparency and communication of monetary policy decisions, enhancing the independence of the central bank, and strengthening the financial sector are essential steps to enhance the effectiveness of monetary policies in Nigeria. Furthermore, the research highlights the importance of coordination between monetary and fiscal policies to achieve macroeconomic stability and sustainable economic growth in Nigeria. Overall, this research provides valuable insights into the effectiveness of monetary policies in the Nigerian economy and offers recommendations for policymakers to enhance the impact of monetary policy tools in achieving macroeconomic objectives.

Project Overview

1.1 STATEMENT OF THE PROBLEM AND PURPOSE OF THE STUDY

Some years ago, Nigerian economy was faced with the problems of circulation of money. He major problems that affected the economy were price instability unemployment balance of payment which hindered the economic growth.

As time went on, he government decided to establish a policy which was know as “monetary policy” which will be used to control the economy by monetary authorities to check the volume of money quantity availability cost and direction money and credit in the economy as a hole.

The purpose of the study is listed beneath:

– To find the effect of monetary policy on employment in the Nigerian economy

REASONS FOR THE STUDY

The reasons for the study is to know the effectiveness of monetary policy banking sector of Nigeria and some of the reasons are listed beneath-

1. To know the reason why monetary policy is vital instrument in the banking sector.

2. To know the effectiveness of monetary policy on banking sector in Nigeria.

3. To consolidate banking activities in the economy.

4. To stabilize the availability of monetary in circulation in the Nigerian economy.

SIGNIFICANCE OF THE STUDY

In this course of study throughout the process I have acquired in my study which I have gone through and I have realized that the government and the banks will benefit more form this research work and even those in the department of banking and finance and other financial studies which readers will benefit form it and further looking into it I observed that it will help the global world by acquiring more knowledge through reading my research.

1.2 DEFINITION OF THE TERMS

The terms used in my research will be firstly defined as follows:

EFFECTIVENESS:

According to the oxford dictionary it is the act of producing the result that is wanted intended.

MONETARY POLICY:

According to John Orjih referred to monetary policy “as a deliberate government policy which manipulates the cost of and availability of money and credit as a means of achieving the desired level of prices employment output and other economic objectives.

BANKING: It is the business activities of the bank (s) according to Kalu (2003)”as an association of person (s) authorized by law or incorporated that carry on financial services to the general public.

NIGERIA: This is an association of people with different status that is controlled by the federal government.