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Chapter one


Background to the Study
Finance is the lifeblood of trade, commerce, and industry. Nowadays, the banking sector serves as the backbone of modern banking business development in every country, and many rely on the banking system.

The name bank is either from the Old Italian word “bance” or from a French word that requires it for various reasons and provides its customers with quick payment and withdrawal facilities in the form of checks and drafts. The banking industry has been singled out for special protection due to the critical role it plays in the economy.

Bank supervisors are responsible for not just enforcing responsibilities and regulations, but also making decisions about the soundness of assets, managing capital sufficiency, and maintaining trust in the financial system.

The central bank presented grounds for the adoption of monetary management, legal framework, and regulation to strengthen institutional facilities, such as frequent monitoring and examination of the bank, which is one method of maintaining surveillance of the banking system.

The colonial authority organised an inquiry in 1946, led by the G.D patron, to investigate Nigerian financial activities. Prior to the inquiry, the banking industry was mostly unregulated. The G.D patron (1948) report, an offshoot of the inquiry, served as the foundation for the country’s first banking regulations.

The banking ordinance of 1952. The legislation was enacted to prevent non-compliant banks from mushrooming and to maintain orderly commercial banking. The banking act sparked rapid growth in the industry, but it also brought disappointment by 1958, when a few banks failed.

To prevent repeat failures and prepare for indigenous management, a bill establishing a central bank of Nigeria was introduced to the Nigerian House of Representatives in 1958. The statute was completely implemented on July 1st, 1959, when the Central Bank of Nigeria began full functioning.

According to Estrella (2002:93), as the amount of cross-border transactions increased, financial institutions adopted more effective and efficient means to enable and finance them while also managing the associated risk.

Banking supervisors throughout the world have seen the importance of harmonising laws, regulatory codes, and standards in order to support economic growth and international financial stability.

Statement of the Problem
The banking business, like any other enterprise, must be controlled; else, its establishment fails. It is an established fact that where there is no regulation, there will be crime.

The Central Bank of Nigeria (CBN) has played a supervisory and regulatory role in Nigeria’s banking sector, to the point where even a layman on the street can observe its operation.

Since the introduction of automated teller machines (A.T.M) to the bank, the apex bank has ensured that the evolution of the banking sector benefits everyone. To that end, the effects of regulation and supervision on the banking sector can be considered to be here to stay.

Based on the functions of the apex banks, the researcher wishes to critically investigate the effect of the Central Bank of Nigeria on the banking sector and how it performs its tasks in this regard.

How does Nigeria’s central bank regulate and supervise the banking sector?

Objectives of the Study

The study’s aims are as follows.

Determine the regulatory and supervisory responsibilities of the central bank.

To examine the implications of the central bank’s regulatory and supervisory activities on the Nigerian banking system.

To analyse the scope of the apex bank’s supervisory involvement on the Nigerian banking system.

Analyse the activities of bank regulation and supervision.

Research of Questions

What is the central bank of Nigeria’s role in regulating and supervising the banking sector?

What implications does the central bank’s regulatory and supervisory role have on the Nigerian banking system?

How effectively does Nigeria’s central bank regulate the financial system?

What are the functions of banking regulation and supervision?

Scope of the Study

This article focuses on the effects of regulation and supervision on the banking sector in Nigeria (a case study of the Central Bank of Nigeria Uyo, Akwa Ibom State branch).

Limitations of the Study
In carrying out this research effort, the research was confronted with three factors:

Time factor: Due to lectures and other class activities, the research had a very restricted time to carry out this research task.

Financial Factor: This presented a significant challenge in carrying out this investigation. Places ought to be covered for information was impossible due to insufficient funds or financing.

Respondents’ uncooperative attitudes: The researcher was unable to obtain some vital information from the respondents due to their bad attitudes towards the oral interview and questionnaire questions.

Significance of the Study

This research effort will be of enormous value to all and all because the study deals with the expansion and development of the banking sector.

This study will also be useful for educational institutions, individuals, commercial bank participants, and the broader financial system in understanding how the Central Bank of Nigeria (CBN) performs its supervisory and regulatory functions in the banking sector.

It will also serve as a reference tool for Nigeria’s central bank in determining how to strengthen its banking sector functioning in light of the study’s suggestions.

Finally, it will be useful as a reference for students and other researchers who may want to perform similar study in the future.

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