Effects of Monetary Policy on Bank Lending in Nepal (Published)

Bank lending and monetary transmission mechanism are closely interlinked phenomena. Banks cannot be efficient in their performance without analyzing the impact of monetary policy actions. On the other hand, central bank cannot take appropriate policy actions without having appropriate knowledge of bank lending behavior. This study attempts to find out the impact of monetary policy actions such as cash reserve ratio, open market operations and bank rate on bank lending. In the study, panel data of 24 commercial banks during the period of 1996 to 2015 were collected and analyzed using descriptive statistics, correlation and regression analysis. This analysis shows that open market operations and cash reserve ratio have negative impact but bank rate  has positive impact on bank lending. Therefore,  the central bank of Nepal should rely mostly on open market operations and cash reserve ratio for monetary operation. Further, the study recommends that central bank should hold cash reserve ratio constant as a cushion for the borrowers from fluctuating lending rates by commercial banks. However, since excessive borrowing will have inflationary effect in the economy, the study recommends that central bank commit commercial banks to open market operations to control short term interest rate and money supply in the economy.

Keywords: Bank Lending, Central Bank, Commercial Bank, Monetary Policy

Macroeconomic Analysis of the Relationship between Monetary Policy Instruments and Inflation in Nigeria (Published)

This study examined the role of monetary policy instruments in controlling inflation in Nigeria. The study adopted interest rate, minimum rediscount rate, liquidity ratio, and cash reserve ratio as proxy for monetary policy instruments and the independent variables. These were regressed against inflation rate, the dependent variable. Secondary time series panel data for the period covering 1982 to 2011, were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin in 2011. The study employed multiple regression technique based on E-views 7 computer software to analyze data obtained on the study variables. Four hypotheses were tested and the null hypotheses were accepted based on the regression results. The study found that interest rate, minimum rediscount rate, liquidity ration and cash reserve ratio had no significant influence on inflation. The study recommended that Nigeria shift from being a consumption driven (import) economy to production based (export) economy for the impacts of these policies to achieve desired results.

Keywords: Cash Reserve Ratio, Inflation, Liquidity Ratio, Minimum rediscount rate, Monetary Policy