Non-bank Financial Institutions and Economic Development in Nigeria
CHAPTER ONE
Objective of the study
The objectives of the study are;
- To ascertain the role of NBFIs on economic growth of Nigeria
- To ascertain highlights the problems NBFIs encounter in the performing their developmental roles
- To determine the contribution of NBFIs to the economy
- To ascertain the relationship between non-Bank financial institutions and economic development in Nigeria
CHAPTER TWO
LITERATURE REVIEW
Non-bank financial institutions are financial institutions that do not have a full banking licence and thus cannot take deposits. However, they both compete with and complement traditional banking institutions by providing alternative financial services such as contractual savings (pension funds and insurance companies), investment intermediaries (finance companies, mutual funds and money market funds), microloan organisations and venture capitalists (Mishkin 2007; World Bank 2015c). The three main categories of NBFIs in Egypt (Egyptian Financial Supervisory Authority 2017), Nigeria (Ndugbu et al. 2015) and South Africa (Faure et al. 2006) are insurance companies, pension funds and investment institutions.
A close examination of financial literature exposes the lopsided attention paid to banks. While it is awash with information on the scope and intensity of banks’ contribution to the economy, little is said about the input of non-bank financial institutions (NBFIs) to development. It is true that banks in a developing economy outclass the NBFIs in volume of transaction, versatility of operations, diversity of products and degree of market penetration (Acha, 2005:1). This does not in any way diminish the contributions of NBFIs as they perform similar functions with the banks and complement the efforts of the banks in the financial intermediation process. Despite their complementary role to banks in the areas mentioned above, NBFIs are known to possess potential advantages in the performance of economic development functions. For instance, certain NBFIs are rural in nature, like the community banks (now microfinance banks), and are therefore able to access greater population of Nigerians and their latent savings potentials. Nigeria is a country in dire need of development and cannot overlook the development potentials of NBFIs.
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