THE EFFECT OF DEREGULATION IN BANKING INDUSTRY ON NIGERIA ECONOMY (A Case Study of Intercontinental Bank Plc, Igbona Branch, Oshogbo)

THE EFFECT OF DEREGULATION IN BANKING INDUSTRY ON NIGERIA ECONOMY (A Case Study of Intercontinental Bank Plc, Igbona Branch, Oshogbo)  


Title Page




Table of content 



1.1 background of the study 

1.2 statement of the problem 

1.3 research question 

1.4 purpose of the study 

1.5 scope of the study 

1.6 limitation of the study 

1.7 significance of terms 


Literature Review 

2.1 Deregulation and the banking industries 

2.2 Historical background of banking industries in 


2.3 The Nigeria banking industries 

2.4 Types of banking 

2.5 Some aspect of Nigeria regulation framework 

2.6 Credit control under deregulation 


Research Methodology

3.1  Research design 

3.2 Area of study 

3.3 Population 

5.4 Sample and sampling procedures 

5.6 Method of data analysis 

3.7 Method of data collection 


Data Analysis and Interpretation 

4.0 Data analysis 

4.1 Introduction 

4.2 Interpretation and analysis of data 

4.3 Test of hypothesis 

4.4 Summary of finding 


Summary, Conclusion and Recommendation 

5.1 Summary 

5.2 Conclusion 

5.3 Recommendation 





In July 2004, the new governor of the central bank of Nigeria (CBN), professor Charles Soludo announced that the new minimum capitalization for bank in Nigeria is N25 billion (approximately) all bank are expected to comply by this direction by December 2005.

This announcement struck the banking section like a storm on a dark night. And its has left in its wake a heated debate on its appropriateness in relation to Nigeria banks and the current state of the economy. It is undeniable that this announcement brought with it a number of consequences.

As a result of the central bank of Nigeria (CBN) policy, banks across the nation have to strive for survival. Along the way, some banks liquidated, while some were acquired and others got merged.

Banking as a discipline and a profession has assumed a multi-skilled dimension due to its perceived dynamism in the word economic and social development.

In Nigeria, first bank ordinance was enacted in 1952 this to part an end to the mass features of banks witnessed between 1892 when African banking corporation (now first bank Nigeria) debated as the first established banking industry has become the most regulated sector  despite the much – vaunted deregulation now prevalent in many countries of the word and Nigeria inclusion.

The intercontinental bank plc is our focus under this study.


Given the magnitude of banks problems which confronted Nigeria banking industries especially since the early 1990s, stagnant banks growth inadequate cash to meet their current obligation, giving loan to uncertified persons, militating the right of their customers (interest) and not fiduciary in managing the affairs of their customers, the importance of banking industries reform become paramount.

Therefore, there was need to remove policy distortion which had stalled banks progress. In particular, policy makers began to recognition more visibly the adverse effect of exclusive reliance in the set of policy instrument being enforced through cumbersome administrative control and regulation. It was rightly considered that failure to initiate reforms which would stress deregulation. If existing policy instrument would seriously jeopardize the long term growth and development prospects of Nigeria banks 

Bank deregulation which involves appropriate realignment in capital structure, management, factors determine granting of the  public and interest rate on loan policies (Base lending rate) was viewed as a tool for reducing undue Nigeria intervention in banking activities and providing relevant structure of incentives that would put the banking industries on the path of recovery and growth.


The problem of this study is that despite deregulation in banking sector, banking in Nigeria are still to ascertain some objective of the deregulation, like levity handling of affairs of their customer, giving loan to uncertified person automated teller machine fraudulent act (ATM) and how there will be talked with aim of develop Nigeria economy. Hence, the watch word of this study is to pinpoint the factors that initiating the hall mark of the deregulation in banking industries not yet to be achieve. 


For the purpose of this study five (5) hypothesis are stated and tested.

1. Is it the aims of deregulation in banking industry is to develop Nigeria economy?

2. Does deregulation really contributed to the development of Nigeria economy 

3. What is the problem militating against deregulation in banking industries?

4. Has deregulation in Banking Industries concern loan granted to individuals and corporate body?

5. Do benefit from this deregulation? 


The above questions are required to test the following hypothesis.

Ho: there is no significant relationship between and development of Nigeria Economy and deregulation in banking industries.

Hi: there is no significant relationship between the development of Nigeria economy and deregulation in banking industries.


The study is carried out to reveal the effect of deregulation in banking industries in Nigeria economy. It’s also made it possible to know the effect that banking institute is having no economy whether it is development effect or its economy still stagnant. It bring rise in national income of Nigerians between 1930 and 1948, there was crying for more banks on part of Nigeria to complete with the expatriates in banking operation business.

Another reason for the massive banking development was purely economic. 

The banking boom of 1947 to 1952 concealed with the period of activity of nationalists movement in Nigeria. They made the call that the major reason for under development of the country was her economy that was subjected to the British economic. It had the businessman to think of business in banking so as to replace the monopoly of the expatriates in the banking industries.


The research work of this study includes the primary information from bank (intercontinental bank plc, Oshogbo, Igbona branch), the senior and junior workers of intercontinental bank plc Oshogbo, Igbona branch, coupled with the discussion on the underlying factors of the system of account, liquidity, profitability and visibility factors that can help economy of Nigeria to be developed, but most of the required data were restricted to certain point. The study will also describe the function and achievement of Nigeria banks after the deregulation of the banking industries.


In the course of the study, we were faced with a lot of problems, which takes long time together the information required.

It took a lot of time before we can get co-operation of the staff in the banks.

It also takes a lot of time and stress to convey them that the information required; it’s not to spy out secret of the business.

They felt reluctant to respond and ignored certain question in the process.

The financial and time factor are also impeded the process.


In the aim of this study, the research work attempt to highlight the effect of deregulation in Banking Industries and how far it has been affecting their operations.


a. Monetary Policy: - is a major economic stabilization weapon which involves measure designed to regulate and control the volume, cost and availability and direction of money.

b. Economy: - this is the financial unit or state of a country.

c. Banking Ordinance: - was the first law banking system. It defined banking business also provide license for the bank they can start business operation.

d. Bureau de change: - is non- financial institution but it has been classified to deregulation foreign exchange also it’s to provide money or currency to small users.

e. Indigenous Banking: - are bank owned by the Nigerian citizen. It was started with the National bank in 1933 and the bank was characterized by unhealthy competition.

f. Bank Liquidity: - this refers to the cost reserves or balance held by banks to make-up with their customer requirement.

g. Liquidation means the term used to signify the process of winding up a company and thereby bringing to an end.

h. Profitability: - this is money gained on a business or advantages gained for some action lastly it are the different between cost of purpose or production and selling prize.

i. Convenience: - Bank services should be provide to customer without much regour or difficulties in other words, customers should enjoy banking services with ease.

j. Dealing Member: - This comprise those individual firms or corporate bodies licensed by the council of the exchange to stock, shares and others securities.

k. Promissory Note Is an unconditional promise in writing made by one person to another signed by the makers, engaging to pay on demand or after fixed or determinable future time a sum certain in money, to or to the order of a specified person or to bearer.

l. Role: - It is the importance or usefulness of something

m. Financial Institution: - This is the institution that use its fund chiefly to purchase financial asset deposit, loans, bonds and debentures as opposed to tangible assets.

n. Investment:- this is the purchase of security that offers safety of principal and satisfactory equal to risk.

o. Securities: - This is an income validity documentary by which the claim of holder is specialized property is secured.

p. Financial Intermediaries: - These are the people that act in the business transaction between the financial institution and the customers.

q. Capital: - This is the amount of money that is used to commence a business.

r. Industries Financing: - this is the raising of capital for farm through bank issues of loans and advance for the purpose of working capital expansion.



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