Monetary policy remains the key to every nation’s development and the financial system of an economy is made of institutional arrangements designed to transform savings into investments. Due to this purpose, this study examined the impact of credit crunch, bank lending on monetary policy in Nigeria from 1981 to 2020 using ARDL co-integration approach. The regression estimates showed the existence of a long-run relationship between credit crunch, bank lending and monetary policy in Nigeria. Also, the ARDL regression estimate results pointed that credit crunch has a positive and significant impact on monetary policy while loan to deposit ratio, bank lending and GDP growth rate exerted negative and significant relationship on monetary policy. Other variables like inflation rate and money supply growth rate indicated a negative and insignificant impact on monetary policy. Based on the findings of the study, we conclude that credit crunch positively impact the Nigerian economy both in the short run and long run within the study period through sound bank lending processes, thus concluding that credit crunch is a key determinant of monetary policy in Nigeria. Consequently, the study recommends that credit crunch as a result of lending rate in most of our financial institutions should be moderated accordingly so as to reflect, respond rapidly to local economic conditions, also monetary authorities should modified most of its tools and incorporate some of the macro prudential variables in its dealings with the aim of suppressing the adverse effect of inflationary pressure in the economy.