Effect of Open Market Operations as Tool of Monetary Policy of the Central Bank of Nigeria in Controlling the Economy (A Case Study of Central Bank of Nigeria Plc)

TABLE OF CONTENTS

TITLE PAGE                                                                          i

CERTIFICATION                                                                   ii

DEDICATION                                                                         iii

ACKNOWLEDGEMENT                                                         iv

TABLE OF CONTENTS                                                          v

CHAPTER ONE

1.0 INTRODUCTION                              

1.1 OBJECTIVES OF THE STUDY                                                   4                                    1.2 SIGNIFICANT OF THE STUDY                                                        4

1.3 RESEACH METHODOLOGY                                                     6

1.4 RESEACH QUESTION                                                              8

1.5 STATEMENT OF THE PROBLEM                                                6

1.6 SCOPE OF THE STUDY                                                            8

1.7 DEFINITION OF TERMS                                                              8

1.8 ORGANIZATION OF THE STUDY                                               11

CHAPTER TWO

2.0 LITERATURE REVIEW                                                                13

CHAPTER THREE

3.0 RESEARCH METHODOLOGY                                                       21

3.1 SOURCES OF DATA                                                                     21

3.2 METHOD OF DATA COLLECTION                                               23

3.3 ANALYSIS OF DATA COLLECTION                                              23

3.4 DATA PRESENTATION AND ANALYSIS                                       24

3.5 FINDINGS OF THE STUDY                                                           33

CHAPTER FOUR

4.0 THE HISTORY OF MONETARY POLICY                                       35

4.1 OBJECTIVES OF THE STUDY                                                     40

4.2 INSTRUMENT USED IN MONETARY POLICY                              41

CHAPTER FIVE

5.0 SUMMARY, CONCLUSION, RECOMMENDATIONS

5.1 SUMMARY                                                                                    47

5.2 CONCLUTION                                                                           49

5.3 RECOMMENDATION                                                                    51

REFERENCES                                                                            55

CHAPTER ONE

1.0 INTRODUCTION

In the past year, the Nigeria economy has witness serious micro economy problem, characterized by show in the economic activities, how capacity utilization growing unemployment level debt burden, accelerated inflation intensify exchange rate separation as well as higher perfect receiving of interest rate persistently high and government deficit financing has been identified as the major factors in the observed micro economy problems.

When we talk of micro economy policies, this deals with monetary and physical policies, but this concerned mainly on monetary policies.

Therefore, monetary policies comprises of those policies desired to influence the behavious of micro economy preferably the basic aim of the monetary policy are not the monetary aggregate themselves, but the aggregate in the real sector of the economy such as level of output, stabilization and the economy development.

The policies are designed in an items to charge the trend of some monetary variable in particular direction so as to infuse the desire behavioral change in the monetary policies the bank role is to conduct appropriate monetary policies that is consistence with the main economy objective of achieving real growth in gross domestic product, low inflation rate and satiable balance of payment position. This irrespective of whether the direct of indirect approach is put in place to control money and crudity.

In this regard, the CBN clatter the amount of monetary supply that is consistent with the country micro economy objective and manipulated the monetary instrument at his disposal in order to achieve the state objectives.

Monetary policy is use to influence the macro economic objective because there is a believe that this occur in relationship between the trace variable at the monetary variables.

From the above explanation monetary policy could therefore be define as a delicate action taken by monetary authorities to change the domestic stock of money supply while fiscal policy variable team in constant.

Monetary policy influences the level of aggregate income and spending in the economy by influencing money supply and the cost of borrowing money from the bank. It could also be defined as a policy employing the central bank. It could also be defined as an instrument for achieving the objective of a general economic policy or as a tool used by the monetary authority in other to achieve state economic objectives.