The Effect of Monetary Policy Rate on the Performance of Listed Banks in Ghana over Five-year Period
Abstract
Monetary
policy is the flexible regulation of money supply by monetary authorities to achieve
specified or desired economic goals. Most governments attempt to regulate the
degree of expansion of sources of funds. Monetary policy comes into actuality
when there is an adjustment in the cost of credit, source of funds and exchange
rate. In anticipation of economic expansion, the government then, through the
central bank, have the power to bring down the credit cost, which can further
cut down the rate of exchange. This study used a descriptive research design and
a census sampling technique with a sample
size of nine this reveals that
the central bank is maintaining a tight monetary policy stance, which could
lead to higher borrowing costs for banks and their customers. The standard
deviation of 4.8666 indicates that there is a considerable variation in
monetary policy rates, which could make it difficult for banks to plan and make
decisions. The study further revealed that banks are required to hold only a
small percentage of their deposits in reserve with the central bank. Based on the findings of the study, it
is recommended that banks in Ghana should closely monitor and analyse the
monetary policy rates set by the central bank, as these rates have a significant
impact on their performance. Banks should pay close attention to the interest
rate, as it has a moderate positive effect on the monetary policy rate.
Keywords:
Monetary policy rate
Cash reserve rate
Minimum rediscount rate
Interest rate
Liquidity rate
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