AN EVALUATION OF THE EFFECTIVENESS OF NEW PRODUCTS IN NIGERIAN COMMERCIAL BANKSTHE ROLE OF THE NIGERIA MONEY MARKET
Abstract
The basic purpose of this study was to evaluate research on commercial banks’ ability to generalize or mobilize new financial products. The study is divided into five chapters for easy reading and understanding. The first chapter provided a background to the general state of the economy that calls for the introduction of programs to correct economic imbalances. It also provides a glimpse of the measures, both monetary and fiscal, put in place to build a strong and viable economic foundation for the country’s economy. There will be four more chapters to come, and based on the first chapter, the results, recommendations, and conclusions will be reviewed. Banks have benefited from innovations in products and developments, but some of these banks are facing certain problems such as poor communication system ‘dh’. Fluctuations in interest rates due to propaganda, weak databases and market forces. In view of the above results, recommendations were made to strengthen banks’ efforts in new product development. But it goes without saying that the trend towards new product development has been a welcome and rewarding development in the financial sector.
chapter One
1.0 Introduction
This chapter describes the research background, problem definition, research objectives, research questions, research implications, hypotheses, scope, research boundaries, and definitions of terms.
1.1 Research background
His 1970s oil boom era in the Nigerian economy resulted in a single-product economy, resulting in a nation that relied on oil as its primary source of income and neglected other sectors of the economy. For this reason, many of the industries that were established during this period depended on imported parts and raw materials for their operations, and due to the increase in oil revenues and structural distortions during this period, crude oil prices this year are at critical levels due to riots. was suspected to be in plummeted in 1986;
A number of measures were taken by the various governments to correct the situation, but unfortunately these measures failed because the country was on mono-product economy where there are heavy dependence on oil exports and other sectors of the economy were neglected. It would also be recalled that monetary policies within this period were designed for short term crises control management, but by 1986 till date, the situation has been getting out of control which necessitated a long term crises management of the structural adjustment programme (SAP). The policy was to facilitate attainment of a lost objectives and to correct various distortions in the economy, (SAP) sought within a two year-period to correct the distortation and imbalance inherent in the economy by de-emphasing the unhealthy reliance of the country economy on oil as its main source of revenue.
The banks were chosen as main avenue through which the objectives of SAP and second tier foreign exchange market (SFEM) operation could be met, the effect of this was an unprecedented growth in the Nigeria financial sector. SAP bough to eliminate all the complex administrative both necks and this encourages reliance on market force in all sectors of the national economy.
General deregulation has allowed banks to do more business, especially with a much smaller turnover between merchant and commercial banking. Other subsequent challenges include increasing bank statutory deposits in CBN (N25 billion recapitalization), crude oil liquidity ratio, abolishing foreign guarantees as collateral for Naira-denominated loans, stabilizing collateral, increasing capital adequacy ratio, and policies such as prevention policies that will continue to be strengthened. And the lack of funding is fueling already fierce competition.
Not only are banks and individuals competing, but the entire industry is competing with non-bank financial institutions, now more like commercial banks. As a result of the competitive environment, banks have been asking for deposits. Deposits were the main raw material of operations.
Banks have traditionally acted as intermediaries between savers and investors, mobilizing depositors from the surplus sector. Depositors consist of people who have many investment projects that require more funds than they hold. It also acts as a catalyst for capital formation, which is seen as the most important policy that determines the pace of economic growth and self-reliance. Moreover, they occupy a prime and sensitive position when it comes to speeding up the development of other units in the system.
As a result of more bank licensing, monetary policy, and deregulation, banks are being forced to look for other deposit instruments. Therefore, a desire to introduce new financial products and increase the deposit base to attract more customers can survive the rest of the period. At the time. The increase in the number of financial products offered by banks has been one of the industry’s most significant developments over the years and is related to the system’s deregulation following SAP.
The number of such products has grown to a much more competitive level and more will follow: chip cards, UBA School savings cards, UBA MoneyGram and Diamond Paycards. All of these products were launched as a result of increased competition in an environment enabling commercial banks to weather difficult conditions.
Introduction to Chapter 1:
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A money market is a place or mechanism for obtaining short-term funds or exchanging financial assets that represent short-term debt.
A money market can be easily defined as a market made up of financial institutions and other short-term money and credit dealers looking to lend or borrow money. As a group, these financial institutions and financial institutions facilitate short-term borrowing and lending by connecting institutions with surplus funds willing to lend short-term to institutions willing to borrow.
Nigeria’s financial market can be said to have started with the inception of commercial banking in 1894. However, various military factors made the development of the money market impossible until the Central Bank of Nigeria was established and money tools were introduced. It is important to note that the Nigerian financial market is not at a fixed or specific location or building where money is bought and sold.
problem:
Apart from fulfilling the traditional functions of financial markets, these are the main reasons behind the establishment of the Nigerianization of the credit base. They needed a financial market that offered an exit in the form of local currency deposits to send money back home from abroad. It was also necessary to provide a short-term source of funding to the government to free up some of the funds it had been using as working capital for investments.
The purpose of this study is to assess the role of the functioning of Nigeria’s financial markets in the domesticization of the Nigerian economy’s credit base.
Purpose of research:
The purpose of this study is to assess the role of Nigeria’s financial markets in strengthening the economy’s credit base by specifically assessing it.
A) the availability, suitability and possible defects of money market products in the Nigerian money market; B) Achievement of set objectives
C) The impact of financial market manipulation on Nigeria’s foreign borrowing levels.
D) To improve the effectiveness and efficiency of Nigeria’s financial markets and make appropriate recommendations to achieve its primary objectives.
E) Major providers and borrowers of funds in the Nigerian financial market. What factors are involved in this?
Q) How can I remove or fix the erroneous factors identified? the importance of studying
Mobilizing money is an essential and important factor in developing an economy like Nigeria.Financial markets play a key role in performing key functions for an economy. That is, functions that make the effective fulfillment of these and other related ones more important by ensuring that loose funds do not go unused and by facilitating the efficient allocation and use of the economy’s resources. Promote localization. The credit base of the country’s economy is one of the main reasons behind the establishment of financial markets.
This study addresses how effectively its role in indigenizing the credit base has been played, revealing deficiencies in the functioning of the market, the corrections of which would hinder Nigeria’s money market from achieving its set goals. It’s helpful.
Study scores and limitations
This study addressed the primary purpose for which Nigeria’s financial markets were established, with particular reference to the implementation of policies to strengthen the credit base of the Nigerian economy. The availability, suitability and attractiveness of financial market instruments were addressed. The majority of Nigerian domestic and mixed banks participated in the survey. Extensive literature on the topic was easily accessible.
The study was limited in that it was not possible to visit various bank headquarters for oral interviews to supplement and extend the questionnaire responses. This was due to lack of funds and time as the headquarters were spread out in Lagos, Kaduna, Uyo, Ilorin, Owerri, Port He Hacote, Jos, Maidugli Benin, Kano, Calabar etc.
Definition of key terms
1. Indigenization of the credit base:
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Make available domestically from domestic sources for loans to businessmen, start-ups and donors
2. Local Currency/Assets:
Such Nigerian financial market instruments are treasury bills, treasury bills, call money, commercial bills, etc., as opposed to their foreign counterparts.
3 Short term financing/loans:
Loans received or granted for a term of less than three years.
4 Resource mobilization
The process of purchasing excess unused money within a country’s financial system that is circulating outside the banking system.
5 Open Market Operations (O.M.O)-:
The buying and selling of securities in the money and capital markets by a CBN for the purpose of increasing or decreasing bank lending.
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