THE IMPACT OF MONETARY POLICY ON COMMERCIAL BANK

Banks generally play important role in the development of any economy. Hence the industry is so sensitive that it is said to be the backbone of every economy. The failure of bank (commercial banks in particular) may therefore bring about failure of the entire economy hence the need to control the activities of commercial banks to ensure effective economic development. Consequently the government had always tried to have effective control over commercial banks, but due to the bank quest for profit maximization, they have not always complied with the guidelines used by the monetary authorities. This problem of incompliance equally made it relatively impossible for the achieving of the objectives of monetary policy. However the problem which the researcher wants to point out is the handicap being faced by commercial banks in trying to strike a balance between liquidity and profitability as imposed by the government monetary policy.