An Evaluation of the Impact of Supervision and Control of the Central Bank on the Performance of Commercial Bank ( a Case Study of Access Bank, Sokoto Branch)
CHAPTER ONE
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To analyse the objectives of supervision and control of commercial banks in view of the existing monetary policies of the CBN.
- To examine the effectiveness of the supervisory and control techniques of the CBN specifically the ability detects malpractice on time.
- To assess the impact of supervision and control on the performance of commercial banks with regards to liquidity.
- To appraise the ongoing reforms of the CBN
CHAPTER TWO
REVIEW OF RELATED LITERATURE
THE BANKING SYSTEM
The banking system in any economy plays the important role of promoting economic growth and development through the process of financial intermediation. Development economists argue that the existence and evolution of financial institutions and markets constitute an important element in the process of economic growth. The banking system, in promoting economic growth, plays the following roles among many others:-
- – Improving the efficiency of resource mobilization by pooling individual savings; – Increasing the proportion of societal resources devoted to interest-yielding assets and long-term investments, which in turn facilitate economic growth. This relates to the savings function of banks and the pivotal role of savings is demonstrated by the fact that when it is in short supply in any nation, investment and the standard of living decline.
- – Providing a more efficient allocation of savings into investment than the individual savers can accomplish on their own. This flow of savings into investment ensures that more goods and services can be produced, thus increasing productivity and the nation‟s standard of living.
- – Reducing the risks faced by firms in their production processes by providing liquidity and capital; – Enables investors to improve their portfolio diversification by providing insurance and project monitoring. Apart from providing insurance services as part of the practice of universal banking, banks have developed a number of products linked to specific insurance policies which are designed to offer protection against life, health, property and income risks. In addition to these, the banks have been used by businesses and private consumers to “selfinsure” against risk; that is holdings of cash and other similar products are built up as protection against future losses.
- – Provides a veritable platform for an effective monetary policy implementation thereby enhancing the effective management of the economy. The banking system has been one of the channels through which government carries out its policy of stabilizing the economy and controlling inflation. Through the manipulation of certain key variables such as interest rates and the quantum of credit, government is able to influence borrowing and spending within the economy. These in turn affect employment, production and prices
- – Facilitates a reliable payments system which provides support for the economy. In this regard, certain financial assets such as current accounts, deposit / savings accounts, domiciliary accounts etc, which serve as media of exchange for payments readily, come to mind. Cheques, credit cards and electronic transfers are the principal means of payment today.
- – Provides credit. The banking system provides credit to finance investment and consumption. This is a major function of the banking system.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study an evaluation of the impact of supervision and control of the central bank on the performance of commercial bank.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain an evaluation of the impact of supervision and control of the central bank on the performance of commercial bank
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of supervision and control of the central bank on the performance of commercial bank
Summary
This study was on an evaluation of the impact of supervision and control of the central bank on the performance of commercial bank. Four objectives were raised which included: To analyses the objectives of supervision and control of commercial banks in view of the existing monetary policies of the CBN, to examine the effectiveness of the supervisory and control techniques of the CBN specifically the ability detects malpractice on time, to assess the impact of supervision and control on the performance of commercial banks with regards to liquidity, to appraise the ongoing reforms of the CBN. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of access bank, Sokoto. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up customer care officers, HRMs, marketers and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The research examined the role played by the regulatory authorities towards a healthy supervision of the operation of banks in Nigeria and also examined the tools, scope, methods and policy framework of supervision. The research was guided by three hypotheses which questioned the efficacy or otherwise of the impact of the supervision in banks. The research borrowed heavily from related research material which was appropriately referenced. It adopted a questionnaire-based method of evaluation, testing the efficacy of each hypothesis using the chi-square method and comparing the result with empirical statistical evidences in order to form a basis of opinion. The study found out the extent at which supervision has so far attained efficiency level in the banking sector for the period under review. Also found out that control aspect of supervision has not ensured effective management efficiency while minimizing waste and misappropriation of funds
Recommendation
The modification which I propose is the establishment of a committee of Banking Supervisory Authorities (CBSA). The Institutionalized CBSA, to which all banking supervisory authorities (including the Central Bank of Nigeria, the National Deposit Insurance Corporation and the designate of the licensed banks amongst others) should belong, should be empowered to stipulate minimum prudential standards ranging from entry requirements, thresholds for illiquidity and insolvency, to failure resolution options. Such harmonized prudential standards should be binding on all financial institutions.
References
- Adebisi, Oloyede (1994). Banking Regulation in Nigeria: An Analytical Perspective. Lagos: CBN Economic & Financial Review, Vol. 32.
- Alashi, S.O. (2008). “Process of Restructuring and Distress Resolution in the Nigerian Banking System” in Deregulation and the Banking Crisis in Nigeria: A Comparative Study.” England:
- Amugo, K. N. (2002). Regulatory and Supervisory Imperatives in a Globalised Financial System .
- Banking Supervision Department (2005). “Banking Sector Consolidation: The Journey So Far”. Abuja: CBN publication.
- Bench, Robert R. (1993). “Development in International Financial Regulation: Some Observations”. Salt Lake City, Utah: paper presented at the Gain Institute of Finance Annual Conference.
- Cameron, R (1972). “Banking and Economic Development: Some Lessons of History”. Oxford University Press, New York. Central Bank of Nigeria, Annual Report and Accounts, various issues, Lagos.
- Central Bank of Nigeria (2005). “Revised Procedures Manual for Processing Applications for Bank Mergers/TakeOvers”. Abuja: CBN publication.
- CBN/NDIC Publication (2002). “The Framework for Contingency Planning for Banking Systemic Crisis in Nigeria” Abuja: CBN/NDIC Publication. 78
