Monetary Policy and Performance of Deposit Money Banks in Sub-Saharan African Nations: Study Case of Nigeria

Abstract: This research examined the nexus between monetary policy and deposit money bank performance in selected sub-Saharan African nations. The study’s specific objectives were to investigate how interest rate, cash reserve ratio, and liquidity ratio would impact profit after tax of Nigerian banks. Secondary panel data from 2018 till 2023 and sourced from the central Bank of Nigeria annual bulletin was utilized for the study. Also, the selected deposit money banks were Zenith Bank PLC, First Bank PLC, GTCO, Jaiz bank and Wema bank PLC. The unit root test showed that all the variables were stationary at levels and the Hausman test revealed the usage of fixed-effect regression. Findings showed that monetary policy ratio and liquidity ratio were positively significant while cash reserve ratio was negatively significant in impacting the after-tax profit of the selected banks. The research, therefore, recommended that Nigerian banks could benefit from a greater allocation of their capital to current assets in order to improve their liquidity.

Monetary Policy, Profit after Tax, Interest Rate, Cash Reserve Ratio, Liquidity Ratio

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