THE ROLE AND IMPORTANCE OF CENTRAL BANK OF NIGERIA IN THE PREVENTION OF BANK FAILURE IN NIGERIA. A RESEARCH PROJECT MATERIAL ON ACCOUNTING
This study, which is, captioned the Role and Importance of the Central Bank in the Prevention of Bank Failure in Nigeria has revealed the types, causes effects recognition and prevention of bank failure in Nigeria.Some of the findings indicated that banking failure was mainly as a result of poor portfolio management and inadequate capital basis, a majority of the population interviewed acknowledge the fact that bank failure an be prevented. The study also pointed that the Central Bank of Nigeria has not relented in it effort in this light against distress within the Nigeria financial system, illustrating the role banks have to play in the growth of the economy for the well being of the country.Some other causes were identified which were discussed in details encompassing all other causes not mentioned as separate causes of bank failure.These major causes include, macro-economic instability, poor portfolio management, fraudulent activities by directors, the competent and unqualified staff, last but not the least, inadequate capital base. The study concludes its findings by commending the that the Central bank of Nigeria should ensure that banks adhere strictly to the prudential guidelines.The tribunals that have been set-up for the purpose of debt recovery should not relevant in their effort. Workshop should be conducted from time to time to discuss changing economic issues that affect the banking industry either positively or negatively so the bank failure will be cu-tailed to a large extent without causing havoc to the nations economy.
1.1 BACKGROUND OF THE STUDY
The history of bank failure in Nigeria can be traced back to the early thirty’s when the industrial and Commercial Bank Limited which was established in 1929 and went into liquidation within a year it stored operation as a result of its generosity and liberty I extension of credit facilities especially to “managing directors” Ugwuanyi Willy (1977) pg. 33.
A series of failure followed after the first in degree bank failed in 1930. These failure were attributed tot he poor banking habit of both customers and bank staff who operated in an environment that was not guided by any appropriate authority at the time. With the advent of the Central Bank of Nigeria (CBN) in 1958 and it commencement of duty in 1958, there has been the restoration of sanity within the banking industry if not for some economic distraction, which rocked the industry for some times in recent years.