THE EFFECTS OF COMPUTER APPLICATION ON PROFIT OF BANK’S IN NIGERIA

 Inflation has been a problem; many countries of the world have been experiencing especially the developing countries. It started during the early 60’s, which results to the incorporation of economic policies as a measure to reduce the effect of the inflation in the economy, and most of these measure taken by developing countries to check the problem of inflation are in the form of the use of central bank instrument of credit control. This is aimed at reducing the volume of money in circulation and maintaining it to ensure low cost of living. Nigeria as other developing countries is also faced with the problem of inflation. In Nigeria, inflation has been a problem for policy makers since the 1970’s and ever since then to date the rate of inflation is on the increase.
In defining what inflation is various perspectives from different economists are as follows:
1)  The system whereby too much money is chasing too few goods.
2)  Whereby there is a fall in the purchasing power of money.
3)  Where there is an increase in the amount of money in circulation.   
4)  Where there is an excess of wages claims over productivity growth.
For the purpose of this study inflation is defined according to Ben Chukwuemeka Anibueze Banking practice volume three as “a sustained rise in the general level of prices of most goods and services”. That is to say that there is always an increase in price without fluctuation. The supply of money would be affected due to increment in wages salaries especially if there is no increment in productivity and also increment in petroleum pump price, which the federal government has initiated, can also result to inflation. Also, government expenditure can create or increase the rate of inflation. This is due to some unavoidable government consumption expenditure on the economy.
The central bank of Nigeria has tried to regulate the liquidity position in the economy through its credit guidelines some of which are:
a) Control of the rate of expansion of commercial and merchant banks aggregate loans and advances.
b) Guide the banks in channeling their credit to different sectors of the economy.
c) Regulate the banks lending into a view to ensure that they exercise prudence in their granting loans and advance. These guidelines help in regulation of expansion of money circulation, thereby controlling inflation in the economy.
The central bank of Nigeria being the apex bank is empowered with the responsibility of formulating and executing monetary policy in Nigeria. There are many objectives behind the formulation of monetary policy, which varies with time and places. In Nigeria they stand as:
a) Maintenance of confidence in Nigerian currency through measures to stabilize domestic wages and prices.
b) Support for increasing levels of agricultural and industrial output.
c) Effective arrangement for supplementing current government expenditure and for providing development finance.
The central bank of Nigeria was established by the act of 1958 and empowered to use certain monetary control instruments available to it. With these instruments of credit control, cash and liquidity ratios are being regulated. The central bank of Nigeria can also reduce liquidity by compelling government and it parastatals to withdraw all their deposit from merchant and commercial banks and deposit some with the central bank. This will help in checking inflationary rate in the economy.
The objective of this work is to explore into the hindrance of against effective measures undertaken to curtail the rate of inflation in Nigeria.
To determine the effectiveness of the use of various instrument of credit control employed by the central bank of Nigeria to check the volume of credit creation in difference sector of the economy.
To ascertain why inflationary rate still seems uncontrollable undermining all the measures that has been taken to reduce it at least to a certain level.
To identify these problems and make necessary recommendations on how to improve employment in order to control inflation in the country.
This study will help in policy making and investment. It will also serve as a guide to monetary authorities on how to control inflation through the use of instruments of credit control in the country. After identifying the problems, it would also help federal government and central bank of Nigeria in allocating resources to different sectors of the economy by checking its expenditures.
Banks would benefit from the study in solving their credit creation problem, which is a constraint to the profit making abilities in most banks.
In order for one to understand this work easily, there are certain terms one needs to know. These includes:
1. CREDIT: Credit is referred to as money, which banks gives to customers in the form of loan and overdraft
2. LOAN: This is the system whereby a bank borrows out or lends money to his customer, which will be paid back on specified time with interest.
3. OVERDRAFT: This is a situation whereby a customer with current account is allowed to withdraw money more than he has in his account.
4. INFLATION: This is a situation whereby there is continuous increase in the general level of prices of goods and services.
5. MONETARY AUTHORITY: This is the institution that is charged with the responsibility of controlling the supply of money. The central bank of Nigeria (CBN) and federal government are responsible for this.