The Effect of Monetary Policy on Ecobank Financial Performance in Liberia
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Abstract
This study examined how monetary policy tools affect Ecobank Liberia's financial performance, focusing on how the Cash Reserve Ratio (CRR) and Interest Rate (IR) influence profitability measured by Profit Before Tax (PBT). Using 21 years of secondary data (2002– 2022) from Ecobank Liberia’s financial statements and reports from the Central Bank of Liberia, the study utilized a multiple regression model with Total Assets and Capital Ratio as control variables. Findings indicated that CRR and Total Assets significantly impact profitability, whereas interest rates are not significant in the final model. The results highlight the structural limitations of Liberia’s dollarized economy, where reserve requirements serve as a more effective policy tool than interest rates. The study concluded that monetary policy transmission in Liberia is more efficient through reserve management than through interest rate channels and recommends policy reforms that enhance liquidity regulation while supporting bank profitability and resilience.
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