EFFECT OF MONETARY POLICY ON BANK LENDING TO THE PRIVATE SECTOR IN NIGERIA

The study examines the effect of monetary policy on bank lending in Nigeria from 2008 to 2024. The dependent variable was proxied by credit to private sector, while the independent variable was proxied by comonetary policy rate and treasury bills. Using Ex post facto research design, quarterly time series data were extracted from the Central Bank of Nigeria's statistical bulletin 2024 and ARDL estimation test was used based on the unit root test result. The result showed that monetary policy rate and treasury bills had a negative significant effect on credit to private sector in Nigeria. The study recommends that since higher monetary policy rates reduce credit to the private sector, the Central Bank of Nigeria (CBN) should carefully balance inflation control objectives with the need to stimulate private sector credit. A gradual and measured adjustment of MPR, rather than sharp increases, would minimize the adverse effects on credit creation. Similarly, heavy reliance on treasury bills for deficit financing may discourage bank lending to businesses, thereby slowing investment and growth. To ensure sustainable credit growth, the Central Bank of Nigeria (CBN) may need to carefully balance monetary tightening with targeted interventions that promote credit flows to productive sectors.