EFFECT OF THE INFLUENCE IN THE PRICE OF BANK PRODUCT BY THE REGULATORY BODIES ON THE CUSTOMERS OF THE BANKS. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
CHAPTER ONE
INTRODUCTION
Background of the Study
The banking sector in any economy serves as a catalyst for growth and development Banks are able to perform this role through their crucial functions of financial intermediation provision of an efficient payment system and facilitating the implementation of monetary policies. It is not surprising therefore, that governments the world over attempt to evolve an efficient banking system not only for the promotion but also for the protection of depositors maintenance of public confidence in the system, stability of the system and protection against systemic risk and collapse. Worldwide the banking business is highly regulated. This is because of the pivotal position the financial industry occupies in most economies. An efficient system, it is widely accepted and is a sine qua non efficient functioning of a nation’s economy. Thus for the industry to be efficient, it must be regulated and supervised in view of the failure of the failure of the market system to recognize social rationality and the tendency for market participants to take undue risks which could impair the stability and solvency of their institutions.
Regulation and supervision of banks remains an integral part of the mechanism for ensuring safe and sound banking practice at the apex of the regulatory and supervisory framework for the banking industry is the Central Bank of Nigeria (CBN). The Nigerian Deposit Insurance Corporation (NDIC) however, exercises shared responsibility with the Central Bank of Nigeria for the supervision of insured banks. Active cooperation exists between these two agencies or both the focus and modality for regulating and supervising insured banks. This is exemplified in the coordinated formulation of supervisory strategies and surveillance on the activities of the insured banks elimination of supervisory overlap, establishment of a credible data management and information sharing system. In the main bank supervision entails on site examination of the institutions and off-site analysis of periodically rendered prudential returns, a process called off site surveillance. The two activities are mutually reinforcing and are designed to timely identify and diagnose emerging problems individual banks with a view to prescribing the most efficient resolution options.
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