This research project work was undertaken with a purpose of determining and evaluation of the effect of the Role of Commercial Bank in Achieving Stability in Foreign Exchange.

The effect of the Role of Commercial Bank on the behavioral aspect of management information system are Aggression Avoidance and Projection on the other hand other operational pressures are maintaining the system. Personal problems in the book-keeping department maintaining book-keeping machines.

Exparching volume of operation’s need to accommodate the increasing volume need to maintain or reduce cost-unsatisfactory output. Errors in terms of reports and statement delays in work processing needs or system change.

The study has a library research and empirical study. Additional information were collected from journals bullies text book and newspapers etc. it was been clear to me from what I found out that the Role of Commercial Bank in Achieving Stability in Foreign Exchange plays a very big positive better information for commercial loan management improve the speed limit & accuracy of services to customers and also provides necessary data input for advanced financial information system.

It leads to problem awareness permits feed back on the implementing of decision. It support problem analysis and selection of alternatives it influence the choice of the most appropriate option. Also computer are used in implementing. Strategies or plans for they can also be used for daring up the budget in constituting investment port failed and in bank’s balance sheet management.

From the work been mentioned above it is quite clear that if Nigeria bank continue to encourage the use of the Role of Commercial Bank in Achieving Stability in foreign exchange would have a better standard of living & the work of science & technology as regards to computer services.

ACKNOWLEDGEMENT

A considerable part of credit for this project research work must deserved from a good number of people without whom I would not have been able to complete this research work.

I therefore wish to express my appreciation and gratitude to my father Mr. D. Chikebe and my lovely mother Mr. C.O. Chikebe, my brothers and sister for their financial and moral support throughout the duration of my academic pursuit.

My special thanks also goes to my project adviser supervisor Mr. J. Orji for his kindness & who in every way made out time to teach and directed us on how to *write the project.

I will also send my appreciation to Mr. Gogonus Onwudiwe Chigo Ohalete of Intercontinental & Standard Trust Bank for their Assistance in getting a reliable information textbook bullions and reports finally the greatest of all thanks goes to my Almighty father for his loving kindness & mercies for making it possible for me to complete this project work with God all things are possible.

DEDICATION

This project is dedicated to the Almighty God for his guidance and protection and also to my parents Mr. & Mrs. C.O. Chikebe, our H.O.D Mr. J. Orjih, my brothers & sisters & finally to my fellow students in the department of banking & finance.

TABLE OF CONTENT

Cover page

Title page

Approval page

Abstract

Acknowledgement

Dedication

Table of content

CHAPTER ONE

Introduction

Background of study

Statement of problem

Objective of the study

Significance of the study

The limitation and study

Definition of terms

CHAPTER TWO

The literature review

CHAPTER THREE

Research design and methodology

Sources of data

Location of data

Method of data collection

CHAPTER FOUR

Summary findings

CHAPTER FIVE

Conclusion

Recommendations

Bibliography

FORMAT FOR THE PROJECT

Cover page

Title page

Approval page

Abstract

Acknowledgement

Dedication

Table of content

CHAPTER ONE

Introduction

1.1 Background of study

1.2 Statement of problem

1.3 Objective of the study

1.4 Significance of the study

1.5 The limitation and study

1.6 Definition of terms

CHAPTER TWO

2.1 Introduction to banking and its practices

2.2 Fiscal policy

2.3 Credit lending as a way of control

2.4 Commercial banks participation in foreign exchange

CHAPTER THREE

3.1 Research design and methodology

3.2 Sources of data

3.3 Location of data

3.4 Method of data collection

CHAPTER FOUR

4.1 Summary findings

CHAPTER FIVE

5.1 Conclusion

5.2 Recommendations

Bibliography

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The goal of every government of any country is to achieve equilibrium in the economic system. It is therefore very important that the authorities concerned must regulate the system indirectly with the policies.

This necessitates that government of any country must adopt certain economic policies in order to achieve specific macro-economic goals or objectives; some of such major macroeconomic polices include: monetary policy fiscal policies, exchange rate policy. Most of these polices can only be administered through the agency of commercial banks, which is the pivot of the research work. In Nigeria, for instance, monetary policy has being conducted under wide ranging economic environment since the establishment of the Central Bank of Nigeria (CBN) over many years ago.

Basically, monetary and fiscal policies adopted by the government of a country is posturing economic development with a view to achieving certain growth, sustainable balance of payment, maintaining a stable exchange rate of international competitive levels, combating inflation, price stability and fall employment.

Monetary policy is defined according to CBN briefs (1994) as the combination of measures designed to regulate the values, supply and cost of money in an economy. In consonance with the level of economic activities.

Anyanwu (1993;140) refers to monetary policy as a major economic stabilization weapon which involves measures designed to regulate and control the volume, cost, availability and direction of money and credit in an economy to achieve some specified macro-economic policy objective.

Fiscal policy on the other hand, is an attempt by the government using its expenditure and tax policy to shit the aggregate demand and aggregate expenditure functions towards desired positions. According to Anwanwe (1997:241), fiscal policy is taken to refer to that part of government policies. Concerning the raising of revenue and deciding or the level and pattern of expenditure for the purchase of influencing economic activities or attaining some desirable macroeconomic good.

The intricacy in handling the monetary and fiscal policies to achieve the desired macro-economic objectives necessitates the need for an independent authority. So in Nigeria today, the Federal Government is the sole monetary authority, but it has delegated some aspect of the implementation t o bath the Ministry of Finance and Central Bank of Nigeria (CBN) to formulate, execute monetary policy; to promote financial system. To achieve a desired policy objectives, the CBN is empowered to use monetary policy technique or instruments, and the CBN does most of its functions through the commercial banks.

This technique can be classified into groups: the direct portfolio contrary and indirect portfolio approach. Indirect portfolio includes: Open Market Operations (OMO), Minimum Reserved requirements, discounts rate mechanism. While direct instruments includes: selective credit controls, credit ceiling and moral suasion.

Furthermore monetary policy presupposed that there is some relationship between the supply and the demand for money and economic aggregate such as output, income, savings, general price level and investment. The mix of monetary policy instruments to be used and its effectiveness depend on this relationship.

Monetary policies involves monetary management. Monetary management according to Ojo (1992:3) is defined as the art of controlling the movement of monetary and credit aggregate in the pursuance of stable price and sustainable economic growth.

Therefore, the Central Bank or the Central Monetary authority must attempt to keep the money supply growing at an appropriate rate to ensure sustainable economic growth, domestic and external stability.

However, in Nigeria, the role of monetary and fiscal policy has in creases tremendously since after independence. Both civilian and military governments have adopted there polices to achieve micro-macro objectives. But despite there measures, to suite the constant changes in the economic situation of Nigeria still a lot of problems deviled the economy, ranging from high unemployment, inflation and balance of payments. This prompted me to research on the topic: “the role of commercial banks in foreign exchange.