The Effect of Financial Reforms on Banking Performance in an Emerging Market: Nigerian Experience
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Date
2014
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Publisher
Research Journal of Finance and Accounting
Abstract
The paper examines effect of financial reforms on banking performance in emerging market: Nigerian
experience. The study covers between 1992 and 2011, because the last reform in banking sub-sector was in 2005
during Prof. Charles Soludo as CBN governor (Pre-Lamido era). Automated Statistical Package Technique
(ASPT) was used to analyze the model and Ordinary Least Square method was adopted to analyze existing
relationship of variables and their behaviors. The study reveals that the effect of financial reform on banking
performance is mixed. It was discovered that financial reform is not a causal factor for effective banking
performance and development; but there is need for strong capital account policy to regulate short- term capital
flow and exchange rate volatility. In addition, the Central Bank of Nigeria (CBN) should ensure the stabilization
of financial markets and banks in order to control and manage risk aversion among domestic and foreign
investors in the economy. The paper further recommends non-stopping reforms in the financial sector so as to
serve as check and balances, which would be used to manage and control economic distortion’s trend in the
financial sector. Moreover, policymakers such as Monetary Policy Committee (MPC); regulatory government
ministries, departments and agencies (MDAs) such as Ministry of Finance, CBN, Nigerian Deposit Insurance
Corporation (NDIC), etc. should adopt economic policies that could strengthen and promote allocation of
efficient resources to achieve efficient bank performance in Nigeria
Description
Staff Publication
Keywords
Financial reform,, Banking,, Deregulation,, Financial markets,, CBN, NDIC,, Nigeria.