Abstract:

The study examines the relationship between monetary policy rates and financial performance of listed Deposit Money Banks (DMBs) in Nigeria between 2013 and 2022. The study took a sample of the five largest banks in the country which includes First Bank, United Bank for Africa, Guaranty Trust Bank, Access Bank and Zenith Bank colloquially known as the FUGAZ being an acronym of the first letters of their names. The study therefore measured bank financial performance by net income and loan to deposit ratio while the monetary policy variables include interest rate, inflation rate, cash reserve ratio, exchange rate and liquidity ratio. The results therefore revealed that while cash reserve ratio had a positive effect on net income, all other variables had an insignificant effect on net income. On the other hand, while interest rate had a positive effect on loan to deposit ratio, liquidity ratio had a positive effect on loan to deposit ratio while other variables had no significant effect on loan to deposit ratio. Thus, it is therefore recommended that cash reserve ratio, interest rate and liquidity ratio should be considered as front burner issues in monetary policy formulation as they affect performance of banks mostly