CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Operators in the banking system argue that the pegging lending rate at the present level by the Central Bank of Nigeria (CBN) is not realistic as it is not market determined especially urban considered against the cost of deposits (term deposits and saving account) as the rate of inflation, financial and business risks.
However, it is argued that the Central Bank of Nigeria (C.B.N) sometimes reacts to the face of persistence of excess bank reserves due to weak demand for credit by the private sector and the acute shortage of money market securities in which banks could invest.
Downward and upward tendencies in the level of interest rates are conditioned in part by counter cyclical changes in bank reserves and bank credit.
The purpose of this research work is to verify the fixing of rates of interest changed by banks. The impact of pegged lending rates on effective pricing of bank credit over the years will be assessed.
The work involved an explanation of: The impact of liquidity ratios on interest rates, the relationship between the supply of fund and the pricing of bank credit will also be verified, the impact of liquidity ratio on supply credit and the impact of inflation on the pricing of bank credit.
When the Central Bank of Nigeria (CBN) pegs rates of interest, banks seem to be shortchanged. Yet there is need to fund industrial, agricultural and commercial activities. These sectors required low funding cost if the economy must experience full capacity utilization full employment and a reduction in social crises.
Terms of Use: This is an academic paper. Students should NOT copy our materials word to word, as we DO NOT encourage Plagiarism. Only use as a guide in developing your original research work. Thanks.
Disclaimer: All undertaking works, records, and reports posted on this website, eprojectguide.com are the property/copyright of their individual proprietors. They are for research reference/direction purposes and the works are publicly supported. Do not present another person’s work as your own to maintain a strategic distance from counterfeiting its results. Use it as a guide and not duplicate the work in exactly the same words (verbatim). eprojectguide.com is a vault of exploration works simply like academia.edu, researchgate.net, scribd.com, docsity.com, course hero, and numerous different stages where clients transfer works. The paid membership on eprojectguide.com is a method by which the site is kept up to help Open Education. In the event that you see your work posted here, and you need it to be eliminated/credited, it would be ideal if you call us on +2348064699975 or send us a mail along with the web address linked to the work, to eprojectguide@gmail.com. We will answer to and honor each solicitation. Kindly note notification it might take up to 24 – 48 hours to handle your solicitation.