Abstract
The banking system plays an important role in the Environment and Development. This literature explored the influence of unconventional monetary rule on bank financial efficiency, with a vision to analysis to what degree unorthodox monetary expansion would impact deposit money banks’ performance using Nigeria as a case study for the developing economies in Africa from (2007-2017). Unorthodox monetary expansion is evaluated via assets of the apex bank to GDP ratio and deposit insured during the period. Using the random effect regression panel data analysis, the findings indicate that unconventional monetary policy is of a negative effect on deposit money bank performance. Further analyses show a negatively expressive relation amid unconventional pecuniary rule and Credit Money Banks performance with regards to deposit insurance coverage. On this basis, this literature principally recommends the apex bank of Nigeria to enact monitory regulations aiming to examine the response of credit finance banks’ performance to unconventional measures of monetary policy. The Unconventional Monetary Policy plays an important role in Development.
Highlights
The banking system plays an important role in the Environment and Development
Apex banks modify the pace of monetary policy to be injected to the economy through different mechanisms such as Open Market Operations (OMO), money reserve prerequisites, liquid asset proportion, regulation of financial rate (MPR) and ethical persuasion to accomplish the goals of financial guidelines [4], of which a high level of compliance is expected of the Deposit Money Banks
The banking system plays an important role in the Environment and Development. [28] promulgated the monetarist hypothesis as a result of the Keynesian hypothesis criticism
Summary
The banking system plays an important role in the Environment and Development. The banking system functions as a middleman between the economy’s surplus and deficit, which fosters economic growth and development [35], [43]. The monetary stimulus policy steps implemented over the era involved a steady lowering of the regulation for money related rate (MPR) from 10.25% to 6% and eventually raised to 6.25% on 2010, Reserve fund ratio from 4.0 to 2.0% and further to 1.0% while liquidity ratio (LR) was lowered from 40 to 25%; infusion of N620 billion as Tier 2 capital into 8 distressed banks and interbank loan guarantees [60];[17] Amongst others such as the temporary suspension of mop-up operations; the creation of Asset Management Corporation of Nigeria (AMCON) which commenced full operation in November 2010 and real sector intervention programs [10]; [12]. Based on this premise, bridging the gap in present literature, by studying the extent to which untraditional monetary stance influence deposit fund banks financial efficiency in this geographical region will aid the monetary authorities, the banking industry and other financial stakeholders in developing nations and the world to implement hedging strategies to cushion against the nontraditional monetary policy impact.The subsequent part of this paper consists of the theoretical underpinning, conceptual and empirical discuss of prior studies, and the part will deal with the methodology followed by the interpretation of results and summary, conclusion and recommendation respectively
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