CHAPTER ONE INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The Nigerian economy has undergone structural changes in the past three decades from a predominantly agricultural economy in the 1960s to an economy mainly valient on oil from the mid 1970s

The growth in oil earnings was not fully internalized into the economic system. The result was that the consumption production pattern became largely import oriented inability to emergence of trade arrears.

A growing department burden also surface in the early 1980s as a result jumbo trans contracted from the international capital market. External Debt outstanding rose drastically from US 93.6 million to 1976 to us 18.6million in 1986 and to about us 30.8 billion in 1990.

The pursuit of an over valued exchange rate policy, the subsequent relegation of the agricultural sector to the background, heavy public sector pending and combined to create distortion in the production. Consumption and payments patterns.

        The prections decline in oil earnings in the 1980s necessitates policy redirection aimed at realigning the domestic production patterns with the local resources   base.

          The structural adjustment pro (SAP) was introduced in July 1986 to eliminate   structural distortions and encourage a diversified and broad productive base the major feature of the SAP includes: -

(a)     The re- alignment of the naira exchange rate to reflect forces.

(b)     Tread liberalization.

(c)      Privatization and commercialization of government owned enterprises and the promotion of locally secured raw materials

(d)     The deregulation of the economy.

The banking system has been an integral part of the on- going  structural reforms and it has played a heading role in the management of policy changes within the banking system

        The Union Bank plays a leading role in the management economy.

       The union adopts measures describe appropriate to influence the performance of the financial sector for the achievement of desired objectives which in of monetary stability and a sound financial structure.

        In their performance of the supply of credit and money and sustainable growth without generating inflationary pressures and undus instability in the exchange rate.

       The banking failures of the 1950s lead to the introduction of a Union Bank following the recommendation of J.B. Loynes.

       The ordinance establishing the C. B. N. was promulgated in 1958 and it became fully operational on the lot of July 1959.