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The Role Of Central Bank Of Nigeria In The Regulation Of Nigeria
Economy Through Monetary Policy (A Case Study Of Central Bank Of
Nigeria Enugu Branch)
1
TABLE OF CONTENTS
Title page
ii
Approval page
iii
Acknowledgement
iv
Abstract
v
Table of contents
vi
CHAPTER ONE
1.0
Introduction
1
1.1
Background of the study
1
1.2
Statement of problem
4
1.3
The purpose of the study
5
1.4
Scope of the study
5
1.5
Research questions
6
1.6
Significance of the study
6
1.7
Definition of terms
7
2
CHAPTER TWO
2.0
Literature review
9
2.1
Meaning of bank
9
2.2
Brief history and meaning of CBN
11
2.3
Objectives and functions of CBN
16
2.4
The role of central bank in economic development
22
2.5
Regulatory monetary policy of CBN
26
2.6
The problems of Nigeria economy
34
CHAPTER THREE
3.0
Methodology
40
3.1
Research design
40
3.2
Area for the study
40
3.3
Population for the study
41
3.4
Sample and sampling procedure
41
3.5
Instrument for data collection
42
3.6
Validity of the instrument
3.7
Reliability of the instrument
42
43
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3.8
Method of data administration of the instrument
43
3.9
Method of data analysis
44
CHAPTER FOUR
4.0
Presentation and analysis of data
45
CHAPTER FIVE
5.0
Summary of findings, recommendations and conclusion
53
5.1
Summary of findings
53
5.2
Conclusion
54
5.3
Recommendation
56
5.4
Limitations of the study
57
Reference
59
Appendix
61
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
The development of central banking can be said to date from the
middle of the 19th century. But precisely there is no exact data when
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banking started in Nigeria.
Historically, records showed that domestic
banking activities started in 1961, when a shipping company Elder
Dempter Lines started banking services in Lagos the chairman of the
company in 1392 established the first banking institution called African
Banking Corporation, which metamorphosed, into First Bank of Nigeria. In
1917, Barchays banks now known as Union Bank of Nigeria Plc was
established.
Before 1952, the West African Currency Board (WACB) established
I 1912 was used as the state banks for Anglo-phone West African
Countries, such as Nigeria, Serra-Leone. Ghana and Gambina. The West
African Currency Board (WACB) was based in London and it issued notes
and coins for the Anglo-phone West African countries.
The banking failure of the 1950’s could not but lead to the
establishment of Central Bank to serve as banker to the banking system, to
perform supervisory role over the commercial banks and issue currency
notes and coins thus, regulating the supply of money in Nigeria. Not only
these, it acts as financial adviser to the government on monetary policy and
implementing the policy on behalf of the government.
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The central bank of Nigeria is government bank, established to keep
a country’s financial system under control and close supervision. The
responsibility of managing the central bank of Nigeria is vested in the hand
of the board of directors whose members are appointed by the government.
The central bank of Nigeria is expected particularly in promoting
economy growth by fostering the development of money and capital
market; develop banking habits and sound financial system. In order to
facilitate economy development, central bank of Nigeria tends to engage in
activities, which extend beyond its traditional functions. In this regard, it
played a unique role in the development of Nigeria economy, particularly
in promotion agricultural and industrial development in general.
Central Bank of Nigeria was established to act as the organ of
government that should undertake the major financial operations of the
government and by its conduct influence the behaviour of financial
institutions so as to support the economic policy of the government. It
follows therefore that the central banks of Nigeria must in some sense be a
part of the government machinery with its action clearly co-ordinated with
those of other executive branch of government.
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Argument has been advanced for the complete independence of the
central bank of Nigeria; so far this has not been achieved as there is no
country where the central bank is completely free from government
intervention.
There is no gainsaying in the fact that the role played by the central
banks of Nigeria is establishing Nigerian economy through monetary
policy is an enormous one.
Since it inception in 1958, it has engaged in one stabilizing role or
the other, that is direct or indirect monetary policy.
1.2
STATEMENT OF PROBLEMS
The wind of change economically which is more pronounced in the
development countries, especially Nigeria. In attainment stability in the
economy of Nigeria the central bank of Nigeria is faced with many
problems.
These problems include:
(a)
In Nigeria, the banking habit is still not widespread.
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(b)
Our money market and capital market are not well developed.
(c)
The failure of central bank in putting the non-bank financial
intermediaries under it.
(d)
Political instability
(e)
Government policy
(f)
Administrative bottleneck
Dependence in agricultural sector, unemployment, poor standard of
living and low income per capital are the major problems facing Nigerian
economy.
1.3
PURPOSE OF THE STUDY
Every research work is aimed at solving a specific purpose. The
purpose of this research is to:
(i)
To identify the problems inhabiting the growth, development and
stabilization of Nigerian economy.
(ii)
To identify the roles of central bank in economic development.
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(iii)
To identify the various regulatory policies of the central bank of
Nigeria through monetary policy.
(iv)
To make appreciable recommendation that would enhance the
Nigeria economy through central bank monetary policies.
(v)
To make available suggestions on how to reduce, if possible
remove entirely those problems facing Nigeria economy so as to
ensure maximum economic development in Nigeria.
1.4
SIGNIFICANCE OF THE STUDY
The study of the role of central bank in the regulation of Nigeria
economy through monetary policies with particular focus on Enugu state
will be of immense benefit to both the private and public sectors of the
Nigeria economy.
Student’s captains of industries, political office holders, National
Assembly members, and infact, the general public will benefit a lot from
this study. Investors, especially those who trade on government securities
will also benefit a lot.
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Foreign investors who are always eager to see a stable and viable
economy will find this study very beneficial.
1.5
SCOPE OF THE STUDY
This study covers the role central bank of Nigeria plays in the
economic development of Nigeria using the measures know as monetary
policies.
1.6
RESEARCH QUESTIONS
The following research questions were formulated to get to the
indept of the topic and also based on the statement of problems.
1.
Identify some of the problems you think that militate against the
economy Nigeria
2.
What role, if any does the central bank play in the development of
the Nigeria economy?
3.
Do you think that the central bank is doing enough in regulating the
economy?
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4.
What policies does the central bank employ in regulating the
economy?
5.
Can the efforts of the central bank be improved upon? If yes, how?
6.
Do you think that in controlling other financial institutions, the
central bank is also controlling the Nigeria economy?
7.
How would you rate the Nigeria economy at present?
1.7
DEFINITION OF TERMS
The operational definitions of some technical terms employed in this
research work are given below:
ECONOMY: The use of available resources is a way that saves money,
time and avoids or minimizes waste.
BANK: As a place where money and other valuable things are kept for
safety purposes.
CURRENCY: Money used in country as a medium of exchange.
OPEN MARKET OPERATION: Is the buying and selling of government
securities by the central bank to the public through commercial banks.
MONETARY POLICY: The control of money in a country.
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