The economic policies or interpretation of such policies has always left a key question unanswered, how much authorities do such policies allow the banks to use their powers to lend, to made remarkable impact in the overall economic situation in the country.

Like in banks in most developing economic (Nigeria inclusive) the role of providing advice and issuing financial directives lies in the ministry of finance, the Nigeria deposit insurance corporation and the central bank of Nigeria. The federal government relies on these institution for the proper functioning of banks through their monetary and fiscal policies, which could be concretionary or expansionary. This invariably affects the profitability of commercial banks etc. hence the need for this study.

The Zenith Bank Plc has been chosen in this regard and except where specified individually, banks becomes the terminsnolyg. In this study in depth study is made on how the Apex Banks, the CBN’s financial policies monetary and fiscal affect the profitability of banks and it’s effect and the general influences it has on the economy.

Chapter one of the study deals on the back ground, study of the problems. Statement of hypothesis and what significant of the study is. Second chapter studies the literature used.

The chapter three emphasis on the techniques and sample collection and questionnaire chapter four presentation of data analysis of the data and the interpretation of finding the last chapter five elucidates on the findings and solutions were proffered. Hence given rise to conclusion.

TABLE OF CONTENT

Cover page

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of contents

CHAPTER ONE

Introduction

1.1 Background of the study

1.2 Statement of problems

1.3 Objective of the study

1.4 Significance of the study

1.5 Statement of hypothesis

1.6 Scope and limitation of study

1.7 Definition of terms

CHAPTER TWO

Literature review

2.1 2004 monetary policy and the introduction of N25 billion capital base.

2.2 Monetary and credit policy measure in 2002/2003

2.3 Frame work for determine bank cost of funds

2.3.1 National saving certificate

2.3.2 Federal government development stocks

2.3.3 Minimum balance on loan saving account

2.3.4 Money Transfer

2.3.5 Policy on SMES

2.3.6 CBN rediscounting and refinancing

2.3.7 Characteristics of promissory note

2.3.8 Paid up capital requirement

2.3.9 Moral suasion

2.3.10 Improvement in the payment system

2.4 Universal banking practice

2.5 Basic principles of commercial banks credit

2.6 Credit policies of commercial banks

2.7 Factors that determine credit policies in Nigeria

2.8 Capital position of the banks

2.9 Liquidity and profitability

2.10 Impact of CBN monetary policy on banks profit.

CHAPTER THREE

Research design and methodology

3.1 sample survey method

3.2 Population sample for the study

3.3 Sources of data collection

CHAPTER FOUR

Data presentation

4.1 Data analysis, interpretation

4.2 List of hypothesis

CHAPTER FIVE

Findings conclusion and recommendation

5.1 Summary of findings

5.2 Conclusion

5.3 Recommendations

Bibliography

Appendix

Questionnaires

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Most banking activities are directed towards lending as credit has remained the backbone of banking operations. It is due to the fact that it provide the bulk profits.

Today, its vital role in commercial banking activities lie in the direct it has on total economic growth and business development. Every year the (CBN) central bank of Nigeria being the monetary authority that is solely responsible for the insurance of guidelines policies and the interpretation of such, comes up with economic measure roles and regulation under which the bank in the country operate. Such policies direct the use of funds from depositors, stockholders, and creditors in order to control the size of loan portfolio thereby determining the general circumstances under which it is appropriate to make an advance. The economic policies (fiscal and monetary) also aim at aiding the banks to maintain a sound financial and banking system promote confidence in sustenance of reasonable banking services for public as well as ensuring a high standard of conduct and professionalism in banking industry. These rules and regulations are contained in monetary and fiscal policy circular being issued by the central bank at the beginning of every year.

The techniques of monetary policies could be broadly divided into two namely:

Direct and Indirect.

While the direct approach has been used very extensively in the more developed market economic, the indirect approach predominate in the less developed economics such as Nigeria. Nonetheless, both technology aim at influence the cost and availability of banking system’s credit. The direct system techniques involves fixing of credit ceiling and interest weight rates the Apex Bank (CBN) for compliance by banks, while the direct approach achieves the same objective through the financial market. The most potent instrument of the indirect monetary policy technique is the open market operation (OMO). It is worthy of note that effort aimed at introducing incorrect monetary and credit-control anchored on the use of OMO are themselves a parts of the given receipts which they would present to the gold smith on withdrawal.

According to Paul Sammuelson, (1990-20) money has an anonymous quality making are dollar just as good as another. In relation to the above the