Monetary Policy and Financial Performance of Quoted Deposit Money Banks in Nigeria

T: This study examined the effect of monetary policy and financial performance of deposit money banks in Nigeria.Ex-post facto research design was adopted to examine how monetary policy variables affect financial performance measured by return on assets in selected Nigerian deposit money banks over a period of 15 years (2005- 2019). The Study is established on Quantity of Money Theory. Multiple regressionswere used to estimate the joint and individual effects of monetary policy variables measured by exchange rate, monetary policy rate and maximum bank lending rate onreturn on assets. The study revealed that the endogenous variables were significantly related with the dependent variable (return on assets). Thus, these independent variables strongly have an impact on the financial performance of deposit, money banks in Nigeria measured by return on assets. It is concluded that monetary policy instruments have been effective for deposit money banks by inducing higher savings, increasing credit supply, stimulating investment which helps these banks to generate higher levels of profitability. Therefore, the Study recommended that the Government should also consistently adopt monetary policies that will help Nigerian banks to improve on their profitability and also there is a need to strengthen monetary policy rate through effective and efficient regulatory and supervisory framework.