CHAPTER ONE

INTRODUCTION

• Background of the Study

Finance is the life blood for trade, commerce and industry. Nowadays banking sector act as the backbone of modern banking business development of any country many depends upon the banking system. The term bank is derived from Old Italian word “bance” or from a French word that require it for different purposes and provide easy payment and withdrawal facility to its customers inform of cheques and drafts. The banking sector has been single out for the special protection because of the vital role banks play in the economy.

Banks supervisor do not deal with only the enforcement of roles and regulations, but also judgment concerning the soundness of the assets, It capital adequacy management and also maintain confidence in the banking system. Central bank presented ground for the adoption of monetary management, legal frame work and regulation to improve institutional facilities id for regular supervision and examination of the bank which is one of the mean of maintaining surveillance of banking system.

In 1946, an inquiry under the leadership of the G.D patron was established by the colonial administration to investigate banking practices in Nigeria. Prior to the inquiry, the banking industry was largely uncontrolled. The G.D patron (1948) report, an offshoot of the inquiry became the cornerstone of the first banking legislation in the country. The banking ordinance of 1952. The ordinance was designed to prevent non liable bank from mushrooming and to ensure orderly commercial banking. the banking ordinance triggered a rapid growth in the industry, with growth also come a disappointment by 1958; a few numbers of bank has failed.

To curtail further failures and to prepare for indigenous control, in 1958, a bill for establishment of central bank of Nigeria was presented to the house of representative of Nigeria. The act were fully implemented on July 1st 1959, when the central bank of Nigeria came into full operation

In the banking system according to Estrella (2002:93) due to the growing volume, the financial institutions have adopted more effective and efficient ways to facilitate and finance cross borders transactions and at the same time manage the related risk. Banking supervisors worldwide have consequently realized and recognized the need to harmonize laws, regulating codes and standards in order to promote economic growth and international financial stability.

• Statement of the Problem

The banking industry like any other industry need to be regulated else the essence for it establishment flops. It is an established fact where there is no regulation, there is bound to be crime.

The central bank of Nigeria (CBN) has played a supervisory and regulatory role in the bank sector in Nigeria, so much that even a layman on the street has observed its operation from the introduction of automated teller machine (A.T.M) to the bank, the apex bank has ensured that the evolution of the banking sector favours all the sundry. To this end, the effects of regulation and supervision on banking sector can be said to have come, to stay, based on the function of the apex banks, the researcher want to critically examine the effect of central bank of Nigeria on the banking sector and  how it perform it roles thus question.

How does the central bank of Nigeria perform it regulatory and supervisor role in the banking sector?

• Objectives of the Study

The objectives of the study are as follows:

1. To determine the regulatory and supervisory role of the central bank
2. To assess the effects of regulatory and supervisory roles of central bank on the banking system in Nigeria.
3. To evaluate the extent of the supervisory role of the apex bank on the banking system in Nigeria
4. To analyze the activities of the bank regulation and supervision.

• Research of Questions

1. What are the regulation and supervising roles of central bank of Nigeria the banking sector?
2. What are the effects of regulatory and supervisory role of the central bank in the banking system in Nigeria?
3. To what extent is the central bank performing its role on the banking system in Nigeria?
4. What are the activities of bank regulation and supervision?

• Scope of the Study

This scope is on the effects of regulation and supervision on banking sector in Nigeria (a case study of central bank of Nigeria Uyo, Akwa Ibom State branch)

• Limitation of the Study

In carrying out this research work, the research was faced with three factors, which are:

Time factor: due to lectures and other class activities, the research had a very limited time in carrying out this research work

Financial Factor: this posed a great challenge in carrying out this research work. Places ought to be covered for information was impossible due to inadequate fund or finance

Uncooperative attitudes of the respondents: the researcher could not get some necessary information from the respondents because of their negative attitude in their response to the oral interview and the questionnaire questions.

• Significance of the Study

• This research work will be of great significance to all and sundry as the study has to do with the growth and development of banking sector
• This study will serve as a reference too for educational institutions, Individuals commercial banks participants and indeed the entire financial system on how central bank of Nigeria (CBN) carries out its supervisory and regulatory roles on banking sector.
• Also it will serve as a reference tool to the central bank of Nigeria on how to improve its functions in the banking sector based on the recommendations made in the study.
• Lastly, it will also serve as the reference material to students, other researchers who may want to carryout or conduct similar research in the future.