Influence of monetary policy rate on credit extension of Nigeria deposit money banks : Ani issue for non- performing loans

Some monetary policy instruments like minimum rediscounting rate (MRR); liquidity ratio, exchange rate in Nigeria were not in favor of the increase in the volume of commercial banks' loans and advances in Nigeria due to poor infrastructural facilities and high cost of operating in such a volatile environment. When these failures occur, investment which is an important factor in economic growth, is kept low. this study, therefore empirically evaluate the Influence of Monetary policy rate on credit extension of Nigerian deposit money banks. This study adopted the ex post factor design The study used secondary data from Access bank, United Bank of Africa and Zenith Banks annual financial reports. Data were analyzed using pooled regression method. The results of this study clearly shows that Policy rate has no significant effect on bank credit. The first result showed that hat the coefficient of the Policy rate was found to be positive and insignificant to bank credit that is p-value of policy rate is 0.4692> 0.05 showing that that Policy rate has no significant effect on bank credit while the coefficient of the policy rate was found to be positive and significant to NPL with the p-value of the policy rate 0.8658 > 0.05 showing that Policy rate has significant effect on non-performing loans in deposits money banks in Nigeria. The study concludes that changes in the policy rate, inflation, GDP, and exchange rate do not significantly affect bank credit but does affect NPLs in Nigeria. The Central Bank of Nigeria should continue to monitor the banking sector and take steps to ensure that banks are lending responsibly. This may include setting limits on the amount of credit that banks can extend to certain sectors of the economy.