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Abstract
This research study aims to examine the relationship between Deposit Money Banks (DMBs) and exchange rate volatility in Nigeria. The Nigerian economy is highly susceptible to exchange rate fluctuations which have a significant impact on various sectors including the banking industry. The study will analyze the role of DMBs in managing exchange rate volatility and its implications for the stability of the Nigerian financial system. The Genaraliszed Autoregressive Conditional Heteroskedasticity (GARCH) is used for the estimation of financial market volatility and ordinary least squares (OLS) estimation technique and data for the period 1997-2021 were used. The findings of this research will contribute to the existing literature on exchange rate volatility and its impact on banking systems particularly in developing economies like Nigeria. Furthermore it will provide insights for policy makers and regulatory authorities to formulate effective measures to mitigate the adverse effects of exchange rate fluctuations on the financial system. The study's outcomes will also be useful for DMBs in understanding the dynamics of exchange rate volatility and developing strategies to enhance their risk management practices.
