CHAPTER ONE
INTRODUCTION
1 1 Background of the Study
Monetary policy deals with the discretionary control of money supply by the monetary authorities in order to achieve the desired economic goals. However, there are two views on the efficiency of monetary policy, and these are the Monetarist and Keynesian view. The Keynesian view is that monetary policy should be directed towards interest rates rather than money supply and that the monetary policy should be subsidiary to fiscal policy (Cole, 2007). Whiles the Monetarist also recommends that the control of money supply should be the main concern of the money authorities. But it should be noted that monetary policy has a central role in macroeconomic management primarily because of the close relationship between the monetary aggregate and economic activity (Milton Friedman 2007).For both developing and developed countries, small and medium scale firms play important roles in the process of industrialization and economic growth. Apart from increasing per capita income and output, Small Medium businesses create employment opportunities, enhance regional economic balance through industrial dispersal and generally promote effective resource utilization considered critical to engineering economic development and growth. However, the seminal role played by Small Medium businesses notwithstanding its development is everywhere constrained by inadequate funding and poor management. In this dynamic world, the role of Banks, whether in a developed or developing economy consists of financial intermediation, provision of an efficient payment system and serving as conduit for the implementation of monetary policies, it has been postulated that if these functions are efficiently carried out, the economy would be able to mobilize meaningful level of savings and channel these funds in an efficient and effective manner to ensure that no viable project is frustrated due to lack of funds. The role of banks in economic development has been richly articulated in literatures.
Pioneer contribution of Schumpeter was of the view that financial institutions are necessary conditions for economic development. Valentine and Mason (1997:1), in the bid to throw more light on how the banking sector exhibit or justify their strength of necessity and importance, said that it is an established fact that banking consists of three basic functions namely; the acceptance of deposits from customers, the transfer of these deposits from one account to another and the lending of money by way of loan or overdraft to customers. By this daily deposits accepted are credited and money withdrawn is debited. An efficient manual accounting system has been in use before the use of computer came into place. Customers deposit money with banks either with the use of cheque or passbooks (for the operators of the current and savings account respectively). Account operators issue cheques to people, instructing the bank to pay a named person a specific sum of money on their behalf. When the branch of each bank receives the cheque, they had to authorize payment of the amount and also debit the customers account. This arrangement was satisfactory when the daily number of cheques and their users were relatively very small. The system began to break down when a larger number of people started making use of the banking services. This made the manual system of keeping customers account an increasingly diicult and expensive task. The above development prompted the use of computer to overcome the above problems. The use of computer is still very new in our society; the computer technology emerged in the late 1940’s in the advanced countries of America and Europe and was introduced into Nigeria in the 1970’s by the multinational corporations like UAC, NCR, etc. while the banks embraced it in the early 80’s. Banking industry has in the past suered a great number of loses through fraud such that a lot of them now face serious financial problem/hardship and eventually were forced to fold up. The industrial and commercial Banks (1947-1952) are typical examples of banks that failed as a result of Fraud.
1.2 Statement of Problem
There are some problems that rose from the fusion of accounting information and Monetary Policy Development fields in accountants’ point of view; one of these problems is that computerized systems are at constant risk of hackers, power failures, Money not deposited with Banks, Foreign Banks, Large Non monetized Sector, High Liquidity, viruses, loss of information, Undeveloped Money and Capital Markets, Small Bank Money and Money not deposited with Banks. Another issue is the relatively high cost of Accounting Information Expert systems, besides, these systems must be up to date, and usually, the firm’s staff needs some sort of special training courses for effective use of the system. There are also some security issues that are mainly summarized with computer fraud risk. Some pointed out that sometimes human error might not be identified as quickly, hence there must be some sort if validation for records input need for accuracy. Sometimes there might be some difficulties in understanding accounting information systems’ expert systems, and there must be some specified adaption or set up for the business so it does not cause chaos to the accounts.