chapter One

1.0 Introduction

This chapter describes the background of the research, the problem, the purpose of the research, the research question, the meaning of the research, the hypothesis, the scope of the research, and the definitions of the items.

1.1 Research background

Nigeria’s banking system has changed radically during his 35 years of independence. Banking evolved from an industry dominated by a few foreign banks in the 1960s to one dominated by the public sector in the 1970s and 1980s, with government policy in mid-1989 having a major impact. Since then, Nigerian private investors have played an increasingly important role. Impact on the development of the banking industry. Extensive state interventions have characterized financial sector policies since the 1960s and were reinforced in the 1970s, aimed at influencing resource allocation and promoting localization. Since 1987, financial sector reforms have been implemented. This includes liberalization elements, measures to improve prudential regulation and to address the banking woes.

The impact of government policies on Nigeria’s commercial bank lending in the post-independence period, from how banks were impacted by policies of public ownership and financial repression, is the underlying reason for the growth of local private banks. It examines everything, up to the causes of the lack of funds in the banking sector and the effectiveness of the implemented financial reforms. Our aim is to first consider two related issues of hers: the government’s control of financial markets. Public ownership of banks and disregard for prudential, but not allocation, regulation has adversely affected the quality of bank lending, particularly the bank’s loan portfolio. Efficiency and Competition Second, financial liberalization and other financial sector reforms have had limited effect in increasing the efficiency of intermediation in banking markets. Not only is the legacy of pre-reform bank lending that has left much of the banking industry in financial trouble, but some reforms have been out of order and others have been inconsistently implemented. It’s also because.

at a commercial bank. Other financial institutions have been established in Nigeria such as Development Finance Institutions (DFIS), insurance companies, various financial companies, installment companies and mortgage companies, but banking dominates the financial and commercial banks. , together accounting for 85%. Total assets emerged in the 1980s. Some of these banks were set up by state governments, but most were set up by Nigerian private investors. The strained growth of local private banks has been very rapid since 1986, especially in the commercial banking sector, with 66 commercial banks operating in Nigeria in 1992. Despite an increase in new entrants, the big three retain their dominance in the banking market, accounting for 48% of total commercial bank deposits, with the Bank of Africa an additional 7%.

The banking industry is plagued by widespread financial vulnerabilities. In 1995, nearly half of all banks in operation were classified as insolvent or in danger of failure by regulators. State governments owned most of the troubled banks.



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