TITLE

Impact of Interest Rate Policy and Performance of Deposit Money Banks in Nigerian

AUTHOR(S)
Enyioko, Newman
PUB. DATE
October 2012
SOURCE
Global Journal of Management & Business Research;2012, Vol. 12 Issue 21, p23
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
The current credit crisis and the transatlantic mortgage financial turmoil have questioned the effectiveness of bank consolidation programme as a remedy for financial stability and monetary policy in correcting the defects in the financial sector for sustainable development. Many banks consolidation had taken place in Europe, America and Asia in the last two decades without any solutions in sight to bank failures and crisis. The study attempts to examine the performances of banks and macro-economic performance in Nigeria based on the interest rate policies of the banks. The study analyses published audited accounts of twenty (20) out of twenty-five (25) banks that emerged from the consolidation exercise and data from the Central Banks of Nigeria (CBN). We denote year 2004 as the pre-consolidation and 2005 and 2006 as post-consolidation periods for our analysis. We notice that the interest rate policies have not improved the overall performances of banks significantly and also have contributed marginally to the growth of the economy for sustainable development. The study concludes that banking sector is becoming competitive and market forces are creating an atmosphere where many banks simply cannot afford to have weak balance sheets and inadequate corporate governance. The study posits further that consolidation of banks may not necessaily be a sufficient tool for financial stability for sustainable development and this confirms Megginson (2005) and Somoye (2006) postulations. We recommend that bank interest rate policy in the financial market must be market driven to allow for efficient process. The study posits further that researchers should begin to develop a new framework for financial market stability as opposed to banking interest rate policy.
ACCESSION #
85349287

 

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