THE IMPACT OF CENTRAL BANK OF NIGERIA REGULATORY POLICIES ON COMMERCIAL BANKS OPERATION (1990 – 1998) (A CASE STUDY OF UNITY BANK OF NIGERIA PLC) ABSTRACT Monetary policies are a stabilization weapon used to regulate the value and cost of money in the economy, it is important for Central Bank of Nigeria to promote stability and a sound financial structure in Nigeria. Central Bank of a country is regarded as the apex bank regulatory institution of the financial system of a country. Central bank is an institution charged with the responsibility supervising and regulating the supply and availability and cost of money with interest of social welfare. This study reveals the impact of monetary policies on commercial bank operations for the period of 10years. From or quite a number of past related literature examined by other studies as its relates to the impact of monetary policies on commercial bank operating were also highlighted. Primary forms of data were used in the research findings. The data gotten from the research survey were analysed and interpreted. Also similar questions on both questionnaires were complete. TABLE OF CONTENTS Chapter One Background of the study Statement of problem Objective of the study Research question Scope of study Limitation of the study Definition of terms Chapter Two Evolution of Central Bank of Nigeria Function of CBN Historical background of Commercial Banking in Nigeria Development of indigenous banks Era of Banking Legislation Regulation and Control Era of Banking Deregulation Implementation of Monetary Policy in Nigeria Bank regulation, supervision and Examination in Nigeria Basic Goals of Bank Regulation Prudential Regulation of the Bank Money Supply in Nigeria Chapter Three Research design 3.1 Procedure for data collection 3.2 Method of data analysis 3.3 Sources of data Chapter Four – 4.1 Data Presentation and Analysis Chapter Five – Conclusion and Recommendations 5.1 Conclusion 5.2 Recommendations References Appendix CHAPTER ONE Background of Study Central Bank is a bank established through the Act of Parliament. It is the bank that acts as a banker to Federal Government and stands also as a guideline to the entire banking system of a country. According to Umole (1986), it is a medium through which government policies are routed to the financial sector of the economy. Its (Central Bank) functions include the promotion of monetary stability and a sound financial system in Nigeria, (section 27 CBN Decree No. 24, 1999). It is actualized objectically by formulating and executing monetary policies. Central bank with its authority is charged with the responsibility of regulating/supervising the banking industry. It regulates and control the activities of banks through deliberate manipulations of money supply.
Central bank’s role includes; Conduct of monetary policy with the objective achieving macroeconomic stability and other objectives of government Promotion and development of the payment mechanism Development of the financial system The continuality of off-fit surveillance and on-sit field examination of backs to the safety and soundness of the system and compliance with the relevant laws and regulation etc. However, since the trade of the apex bank in banking industry is money, the supervision and firm control of the activities of commercial banks, though the manipulation of various components of money are made available to banks. The goal of monetary policy and approach which the CBN adopts compliance and attention should be given to them. The CBN is also responsible for the issuing of licenses and appointment of directors to the banks, monitors the activities such as management, advertisement, profits and the account of banks. In administering or discharging its mandate, the CBN collaborate with other supervisory bodies in particular NDIC. CBN/NDIC collaboration covers such areas as the sharing of information, joint examination of banks, designing and implementing failure revolution measures etc. This examination is aimed at achieving monetary stability by ensuring that banks comply with the monetary policies of the government. In other to regulate the activities of banks, the CBN applies three methods of control which are:- Monetary and credit control Prudential control and Supervisory control (Examination and Supervision). Monetary and credit control appears to be in use must partly because of the ability of monetary authorities to control money supply. STATEMENT OF THE PROBLEM This study focuses on the impact of the regulatory policies of the CBN on commercial banks’ operation in Nigeria. In carrying out its obligation, the CBN employs the tools of monetary policy for the purpose of regulating money supply at any given point in time. In this, there might be some problems which are encountered in carrying out this task. We will be finding out whether there is any relationship between money supply and the tools of monetary policy. For the effectiveness of CBN, we will look at its management of the monetary policy and how it affect the banks, the Nigeria Economy and whether the monetary policy instruments has a greater effect on money supply in the Nigeria economy. OBJECTIVES OF THE STUDY This study is to examine empirically the impact of the use of regulating policies (monetary polices) by the CBN to control and monitor the activities of commercial banks. Thus, these objective are:- To examine CBN’s money mechanism using the monetary policy guideline during the period 1990-1998. To determine the relationship between the expected monetary target and actual monetary targets achieved during the period 1990-1998. To determine the effectiveness or otherwise of the administration machinery for the executive of monetary policy in Nigeria. To suggest appropriate remedies for future improvement when necessary. RESEARCH QUESTIONS Is there any relationship between money supply and the role of monetary policy? How has the management of the monetary policy affected commercial banks operation in Nigeria? Is there any significant effect on the Nigeria Economy following the application of the monetary policy? Which of the monetary policy instruments has a greater effect on money supply in the Nigeria economy? SCOPE OF THE STUDY This study is carried out to examine the CBN regulatory monetary control measures and how they affect the activities of commercial banks in Nigeria. Our study will be restricted to commercial banks in view of the dominant role they play at the largest mobilizers of savings, investments in the economy. Also the monetary and credit policies are primarily executed through the commercial banks and they provide large recommendations. This is aimed at enhancing commercial banking and the administration of regulating policies by the CBN in the Nigeria economy. LIMITATION OF THE STUDY This study evaluate the money supply approach of the Central Bank of Nigeria and the effects on the liquidity levels available to the banks necessary to their operations. We examine the peculiarity of the Nigerian situation in relation to the existence of various important characterized by how level of development of money and capital market. Policies like fiscal and income policies, price control etc, are administered along with the monetary policy. Consequently, it is difficult to single out the impact of monetary policy. Again, monetary policy administration may be delayed because of the existence of various laws in the economy. These lows include, recognition, action and effect lows. Other constraints include difficulty in determining data, financial and time constraints. DEFINITION OF TERMS Liquidity:- This is a state of owning things of value that can easily be changed into cash CBN:- It is the apex regulatory authority in Nigeria financial sector. The responsibilities of CBN are defined by the Bank and Other Financial Institutions Act (BOFIA) of 1991. Dividend:- This is a share of profits paid to people who own parts of a company e.g. shareholders. Interest Accrual:- This is interest due on a loan but not what paid by debtor or the creditor the record to his bank is interest accrual. Last Resort:- This is a place or an institution to go for an assistance where this in not forthcoming from any other place e.g commercial bank go to CBN as lender of last resort when it is not possible to borrower from any other source. Monetary Policy:- This is a major economic stabilization weapon which involves measures designed in the CBN to regulate the value, volume, cost and direction of money and credit in the economy to achieve some specified macro-economic policy’s objectives.
THE IMPACT OF CENTRAL BANK OF NIGERIA REGULATORY POLICIES ON COMMERCIAL BANKS OPERATION (1990 – 1998) (A CASE STUDY OF UNITY BANK OF NIGERIA PLC)
ABSTRACT Monetary policies are a stabilization weapon used to regulate the value and cost of money in the economy, it is important for Central Bank of Nigeria to promote stability and a sound financial structure in Nigeria. Central Bank of a country is regarded as the apex bank regulatory institution of the financial system of a country. Central... Continue Reading
ABSTRACT Monetary policies are a stabilization weapon used to regulate the value and cost of money in the economy, it is important for Central Bank of Nigeria to promote stability and a sound financial... Continue Reading
THE EFFECTS OF NIGERIA MONETARY AND FIRM POLICIES ON COMMERCIAL BANK’S FROM 1990 – 2000 (A CASE STUDY OF FIRST BANK PLC. OKPARA AVENUE, ENUGU). ABSTRACT Issues concerning money have contained to cover invest for some money theories. Money makes life what is and contributes tremendously to the rise or fall in the economic situation of a... Continue Reading
ABSTRACT The economic policies or interpretation of such policies has always left a key question unanswered, how much authorities do such policies allow the banks to use their powers to lend, to made remarkable impact in the overall economic situation in the country. Like in banks in most developing economic (Nigeria inclusive) the role of... Continue Reading
ABSTRACT Issues concerning money have contained to cover invest for some money theories. Money makes life what is and contributes tremendously to the rise or fall in the economic situation of a particular country. It is as a result of the continuous charge in the behavour of money count theorist come by the financial and economic policies to... Continue Reading
ABSTRACT This research project tends to evaluate the impact of supervision and control of the Central Bank on the performance of commercial banks. Access Bank Nig Plc Lagos Branch was used as the case study. To aid this research both primary and secondary data were collected. The instruments used to collect data are questionnaires and oral... Continue Reading
THE ) ABSTRACT The economic policies or interpretation of such policies has always left a key question unanswered, how much authorities do such policies allow the banks to use their powers to lend, to made remarkable impact in the overall economic situation in... Continue Reading
TABLE OF CONTENT CHAPTER ONE 1.0 Introduction 1.1 Background of the study 1.2 Statement of the problem 1.3 Objectives of the study 1.4 Significance of the study 1.5 Limitation of the study 1.6 Definition of terms. CHAPTER TWO 2.0 Review of related... Continue Reading
(A CASE STUDY OF ZENITH BANK P.L.C) ABSTRACT The economic policies or interpretation of such policies has always left a key question unanswered, how much authorities do such policies allow the banks to use their powers to lend, to made remarkable... Continue Reading