Banking Sector Reforms and Nigeria’s Economic Performance

Reference code: c035

ABSTRACT

This study investigates the effect of banking sector reforms on economic growth in Nigeria over the period 1980-2011. Using the ordinary least square regression technique, we established that interest rate, total banking credit to the private sector, inflation rate, inflation rate lagged by one year, size of banking sector capital and cash reserve ratios account for a very high proportion of the variation in economic growth in Nigeria; and although there is a strong and positive relationship between economic growth and the total banking sector capital, the relationship between economic growth and other exogenous variables of interest rate, exchange rate, total banking sector credit to the private sector, inflation rate and cash reserve ratio reveal the wrong signs. The implication which emerges from our empirical results with regards to the wrong signs of these parameters is that theoretical expectations are not always valid; this is because of other factors such as market inefficiencies, policy conflicts, information asymmetry and government interference in the interaction of market forces. These may produce results in direct contradiction to theoretical expectations. The study recommends the promotion of private sector investments through reduction in cost of funds, low inflation and sustainable reduction in foreign exchange premium.  

INTRODUCTION

.......... The CBN took steps to integrate the banking system into global best practices in financial reporting and disclosure requirement through the adoption of the International Financial Reporting Standards in the Nigerian banking sector, by the end of 2010. This helped to enhance market discipline, and reduced uncertainties, as well as limited the risk of unwarranted contagion. The introduction of non-interest banking in Nigeria is expected to herald the entry of new markets and institutional players, thus deepening the nation’s financial markets and further the quest for financial inclusion.
Between August and December 2009, the Central Bank of Nigeria injected the equivalent of $4.1 billion into 10 Nigeria banks adjudged to be facing grave liquidity crisis, sacked 8 bank CEOs and introduced a plethora of regulations and took other direct actions deemed necessary in order to safeguard the banking sector from systemic collapse and to ensure the stability and soundness of Nigeria’s banking sector.
Before the reforms, the banking sector experienced increased spate of bank failures arising from undercapitalization, poor asset quality weak corporate governance practices. Other factors include ineffective control measures by the relevant regulatory authorities coupled with inefficient service delivery by the banks. This ugly trend was compounded by the effect of the global financial meltdown, with the resultant erosion of public confidence in the Nigerian banking system.

Inspite of the reform efforts by the Central Bank of Nigeria (CBN), the Nigerian banking system is yet to function in line with global best practices and standards, thus forms the crux of the problem of this study. ...............

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TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION
Background of the Study
Statement of the Problem
Purpose of the Study
Research Questions
Research Hypothesis
Scope of the Study
Significance of the Study
Limitations of the Study
Organization of the Study
Definition of Terms
References

CHAPTER TWO: REVIEW OF RELATED LITERATURE
Introduction
Review of Reforms
Bank Recapitalization and Consolidation
Electronic Banking
Cashless Policy
Currency Restructuring Proposal
Asset Management Company of Nigeria (AMCON)
Customer Protection/Bank Charges
Micro Finance Banking
International Financial Reporting Standards (IFRS)
Islamic (Non-Interest) Banking
Capital Accounts Liberalization
Money Laundering Law in Nigeria
Impact of Bank Reforms
Challenges to the Banking Reforms
Previous Research
Theoretical Framework
References

CHAPTER THREE: 
Research Methodology
References
This Research project consists of  chapters 1, 2 and 3 ONLY .....

Reference code: c035
Reference code: c035

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