MONETARY POLICY AND RETURN ON CAPITAL EMLOYED

EVIDENCE FROM LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examined the monetary policy and return on capital employed of listed deposit money banks in Nigeria. Data for the study were gathered through Annual Reports and Accounts of the deposit money banks and Statistical Bulletin of the Central Bank of Nigeria for the period of 2014-2023. Data was analysed using both descriptive and inferential statistics. Multiple regression analysis was employed to test the hypothesis using statistical package for social sciences (SPSS). Findings of the study showed that monetary policy rate (MPR), cash reserve rate (CRR), and exchange rate (EXR) have statistically significant impact on the return on capital employed of listed deposit money banks in Nigeria. It was also found that cash reserve ratio and exchange rate have significant linear relationship with return on capital employed of listed deposit money banks in Nigeria. This means an upward movement in monetary policy does have significant impact on the return on capital employed of listed deposit money banks in Nigeria. The research therefore recommends the need by the C.B.N. to ensure that adequate monetary policy rate is put in place to improve the significance in terms of safeguarding the impetus of monetary policy in the Nigerian economy. The study also recommends the need for managers of these banks to fully adhere to the CRR policy by organising more training and workshops to staff on the importance of preserving and adhering to the monetary policy for the effective and efficient operationalisation of the deposit money banks in the short-run and a better health: on banking industry in the long-run. Considering the dependence of using foreign currency in making transactions and the import driven economy has seriously affected the Nigerian economy. Although, recently naira continues to appreciates against the US Dollars.