Challenges of Commercial Banks Regulation in Nigeria

Abstract

The history of the banking system in Nigeria has been occasioned by many problems that resulted in distress. The consolidation and recapitalization exercise in the sector in 2005 was done in a bid to resolve this dilemma. This study examined the challenges of regulating commercial banks in Nigeria. To achieve this objective, the survey research approach was adopted. Specifically, the researcher relied mainly on secondary data for the bulk of the research materials used. Three hypotheses were formulated, analyzed, and tested using statistical mean and the chi-square. The result of the findings shows that challenges in the commercial banking system, which include: weak corporate governance, insider dealings and abuses, lingering boardroom squabbles, massive money laundering, etc., if not properly checked by the regulators, can mar the commercial banks' adherence to the provisions of CBN Acts and that regulatory and supervisory functions of the CBN and the NDIC have effectively curtailed distress in the Nigerian commercial banking system. The study concluded that there was a huge success in ensuring sanity, safety, and confidence in the system due to CBN's robust regulatory network. The study, amongst other recommendations, maintained that CBN should be proactive by ensuring that commercial banks adhere to prudential guidelines.