In recent times, instability in the financial system and the banking sector in particular has risen from institutional failures in the past. In Nigeria, the lesson of the earlier bank failures appeared to have been forgotten as generalized distress swept the banking sub-sector and systematic distress gripped the finance house sub-sector. This research work assesses the banking regulations with respect to banking distress phenomenon and empirical analysis on the extent of failures in the baking industry as well as the major causes.
The statement of the problem identified and categorized the banking distress into two major types; the generalized nature and the systematic. Generalized nature focuses on, when the distress has effect on the industry as a whole, while the systematic concerns only when the distress has effect on the supervisory/regulatory authorities.
Conversely, the researcher was poised to establishing a research design which was instituted to meet the aim of the study. The area of the study was specifically for financial institutions and regulatory authorities within the Enugu state. The researcher did employ both primary and secondary sources of data generation, while questionnaire and personal interviews were also used as an instrument for data collection. He also draw some comparison between the figures adopted from the field survey tabulated during data analysis and figures gotten from both Central Bank of Nigeria annual report for year 2007 and also Nigeria Deposit Insurance Corporation annual report for year 2007 respectively. The researcher also employed chi-square for hypothesis testing.
Basically, from the analysis of data, it was established that the following finding were observed:
·        Even during regulation and deregulation, bank distress still exists.
·        Ownership structures and power-tussle among management directors and managers contributes to bank’s failure.
Incidence of fraud and forgeries among bankers’ staff, also is a contributing factor for bank distress.

Regulation is a form of intervention in any activity, ranging from explicit legal control, to peer group control. It also a restriction placed by an authority with intention of achieving a particular goal. Basically, there are major theories of regulation. Prof. Uche (2008) went on to categorize it into two:

(1) Public Interest theory; it states that regulation is essentially used to correct inequitable market prices. For any regulation to sustain and strive well, it must have the support from the regulatees

(2)            Capture theory of regulation; though regulation may be well set out the interest of the people, but it will then be captured by the regulatees. The industries are organized, and have all the necessary

resources to influence the policy of the government and even that of the public. Therefore, the regulation which set out to serve the interest of the general public, may end up serving the interest of the regulates.

Although, the researcher is not going into details on argument that arises among scholars on the issue of regulation. The debate is normally “on whose interest do regulation protect, is it the general public or the regulates?

Conversely, due to the nature of business bank’s operates and the prominent role they play in any given economy, Odita (2006:1) stated that it ranges from the traditional role of custodian of money; the government therefore, need to give the depositors of fund and other potential/intending investors the confidence in the affairs of financial institution (Banking Industry). This gave rise for the industry to be closely monitored, and directed as accordingly by the regulatory authorities. The objective of supervision is to promote the safety and soundness of financial institutions through on-going evaluation and monitoring, including the assessment of risk management system, financial condition and compliance with laws and regulations.

Invariably, in Nigeria financial sector, there are three principal legislations that provide the legislative framework for the regulation of banks in Nigeria. These are; The Central Bank of Nigeria Act (CBNA), The Bank and other financial Institution Act (BOFIA) and The Nigeria Deposit Insurance Corporation Act (NDICA). Banking regulation, as it is also obtainable in other countries in the globe, is concerned primarily with the protection of depositors and the stability of financial system. The prudential guidelines to banks also comprise among other measures for supervision of banks liquidity, capital adequacy and create exposure and concentrations.

However, banking regulations is a topical issue which covers a wide range of operation of banks in Nigeria, several banking regulations have been put in place, dating from 1952 till date. These regulations are contained in the form of ordinances. The introduction of banking ordinance in 1952, which triggered a rapid growth in the industry with the growth, also witness a disappointment where many banks there after went into distress. Other ordinances that followed the 1952 bank of ordinance are: (a) The Banking Act of 1958; (b) The Central Bank of Nigeria Act of 1958; which was later amended in 1979; (c) the Central Bank of Nigeria decree of 1991, (d) Banks and other financial institutions Decree of 1991 and other Central Banks’ of Nigeria monetary guidelines published at the commencement of every fiscal year.

Although, in the amidst of all these banking regulations, the Nigeria Banking industry did not cease to witness banking instability and banks’ distress Dr. Sani (2003:4) stated that between 1947 - 1952 twenty one (21) banks failed, between 1953-1945 also seventeen (17) banks also failed, in the mid 1990, thirty four (34) bank also failed too.....

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Item Type: Project Material  |  Size: 117 pages  |  Chapters: 1-5
Format: MS Word   Delivery: Within 30Mins.


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