APPRAISAL OF THE ROLE OF CBN AND NDIC IN THE MONITORING OF COMMERCIAL BANKS IN NIGERIA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
This study was designed with the aim of appraising the roles of CBN/NDIC in the management and regulation of commercial banks activities.
In order to actualize the objectives, five banks as sample were selected/chosen for analysis to assess financial institutions performance in relation to the regulatory authorities, CBN and NDIC. Various literature and theoretical issues were discussed. In addition an empirical regression and descriptive analysis was carried out to investigate how CBN/NDIC regulation variables impact on commercial banks’ activities in Nigeria. The findings from both analysis revealed that CBN structure, CBN/NDIC performance and their relationship with commercial banks had a significant impact on the management and regulation of commercial banks’ activities in Nigerian. While depositors’ protection was the only variable that had an insignificant impact on the management and regulation of commercial banks’ activities. With the aid of regression, the research was able to establish that CBN and NDIC make significant impact in commercial banking sector.
It is recommendation that continuous review of prudential guidelines and regulations in the light of dynamics of operating environment for commercial banks as well as enforcement of regulation and compliance with prudential guidelines and regulations to reduce the systematic effects and prevent deterioration in the financial condition of distressed institutions.
Commercial banks are generally all-purpose retail bankers, Ajayi (1991). They mobilize deposits of all sizes and from all and sundry in retail as well as in wholesale markets. They engage mainly in borrowing and lending activities. The lending activities of Nigerian commercial banks have been increasing steadily over the years and recently, the pace of increase has acquired a tempo that needs some explanation.
Management of banks is the process of managing money and providing a whole gamut of banking services. Beginning with the management itself, it involves finding the optimal size and composition of banks overall assets and liabilities, Nwankwo (1991).
An essential feature of a good financial system in the banking industry is the existence and implementation of a well developed and cleared defined set of rules, regulations, enforcement of sanction in case of contravention. Since several developments in the Nigeria economy had necessitated major review of the existing rules, regulations and laws. Consequently, the CBN No. 25 of 1991 (as amended) was promulgated to give CBN wider powers to handle all issues relating to banks from licensing to liquidation.