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AN ANALYSIS OF THE ROLE OF CENTRAL BANK OF NIGERIA IN THE GROWTH OF NIGERIAN ECONOMY
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AN ANALYSIS OF THE ROLE OF CENTRAL BANK OF NIGERIA IN THE GROWTH OF NIGERIAN ECONOMY
This research work titles “the role of central bank of Nigeria in the growth of Nigeria economy” examined the following:The extent to which the Central bank of Nigeria has contributed to the growth of Nigerian economy. Whether Central bank of Nigerian has effectively managed external reserves. The Central bank of Nigeria monitory and fiscal policy instrument is effective in controlling the quantity of money in circulation. And also evaluated the services rendered by the Central bank of Nigeria to the banks and their financial advice to the government. These are the areas that the researcher concentrated while carrying out this research work. The first chapter is the introductory part of the research work. This chapter also contains the background of the study, statement of problems, research Question etc. Data for the study was sourced from two main sources which include Primary and Secondary sources of data collection. Primary data: Questionnaires and oral interviews were used to collect information from the respondents. Secondary data : Journals, magazine and other relevant materials relating to the area of my investigation will be review. Extensive literature review was carried out on direct literature and indirect literature on books, journals and past works. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended question. Simple tables, pie-charts and percentages was used in treatment of data while chi-square was used in the research work. Based on the findings, conclusions were drawn and recommendations were also made in the last chapter of this work which is the fifth chapter.
1.1 BACKGROUND OF THE STUDY
According to Adekanya F. (2009), The first bank, bank of British west Africa (BBWA) was incorporated in march 1893 known today as the first bank of Nigerian plc. This was follows by colonial bank (1917) taking over by the Barclays bank in 1925 now called the union bank of Nigerian plc. The third foreign owned bank established in 1948 was the British and French bank known today as United bank of Africa. Between 1892 and 1952 a member of extertriates and indigenous banks were established most of which failed. This mass failure was caused by the fee for all native of banking, inefficient supervision. And above all, inadequate capital based.
He further stated that The west African currency bank’s (WACB) primary responsibility was to issue African currency which was kept at a fixed party with British pound. This means that the board can neither engage in direct monitory management, nor promote the growth of the nations financial market. To address this problem and coupled with failure of most commercial banks in the country, the Central bank of Nigeria (CBN) was setup in 1959.
Before establishing the Central bank of Nigeria in 1959, three studies were carried out by three scholars namely J.I. Fisher’s report in 1953, I.B.R.B Mission’s report in 1955 and J.B Loyne’s report in 1957.
Ade T.O. (2010), reported that it was not flexible to establish a central bank on the grands that the financial environment did not exist and that it would be impossible to find the local staff to manage the bank.
In his own report, international bank for reconstruction and development (IBRD) recommended a state bank of Nigeria to take over the banking control functions of the financial secretary hitherto was vested with the power of controlling banking operations in the country.
Following, the banking operations in the early 1960s.
J.B Lonyne’s report of 1957 supported the establishment of a Central bank of Nigeria which resulted in the promulgation of the Central bank of Nigeria in ordinance of 17th march, 1958.
This is the enactment of the 1952 banking ordinance and the subsequent establishment of the CBN in 1959 brought sanity to the shaotic banking environment that peceded it. The 1952 banking ordinance stipulated that prospective banking business must be registered and licensed. The Central bank of Nigeria started banking operations on 1st July 1959 with an initial capital of 1.9m of which N1.25m was paid up. The Central bank of Nigeria act as under gone various amendments and the current banking for its functions it provided by the Central bank of Nigeria decree No. 20 for 20th June 1991.
1.2 STATEMENT OF PROBLEM
This study titled “the role of Central bank of Nigeria in the growth of Nigerian economy” attempt to find out the part played by the Central bank of Nigeria in her economic emancipation. The research
went further on to determine the functions of Central bank of Nigeria as it relates to economic development and how instability in the surpass of money in a given economy is controlled. Some of the problems facing the Central bank in the nation’s growth are the application of the financial policy instrument such as the open market operation (OMO) minimum reserve requirement, moral suasion, direct control, direct regulation of interest rate, discount rate system and lots more.
1.3 OBJECTIVE OF THE STUDY
The study on the role of Central bank in the growth of the economy in Nigerian development is undertaking to analyze the operations and relevant policies of the central bank in raising the standard of living in Nigeria. To this end, this research attempts:
1. To determine the extent to which the Central bank of Nigeria has contributed to the growth of Nigerian economy.
2. To examine whether Central bank of Nigerian has effectively managed external reserves.
3. To determine if the Central bank of Nigeria monitory and fiscal policy instrument is effective in controlling the quantity of money in circulation.
4. To evaluate the services rendered by the Central bank of Nigeria to the banks and their financial advice to the government.
1.4 RESEARCH QUESTION
Despite the use of questionnaire in obtains information most of the questions redirected. To the research so that the facts needed could be obtained. The questions are:
1. Does the Central bank of Nigeria effectively manage external resources?
2. In controlling the quantity of money in circulation, are the Central bank of Nigeria monetary and fiscal Polly instrument effective?
3. To what extent does the Central bank of Nigeria contributed to the growth of Nigerian economy?
4. What is the major role plaid by the Central bank of Nigeria?
5. Does the Central bank of Nigeria render services to banks and also act as financial advices to the government?
1.5 SIGNIFICANCE OF THE STUDY
Economic development in any economy (Capitalism socialism, communism, or mixed economy) can not be fully discussed with mentioning of the role of Central bank of Nigeria. Thus, the study of the role of Central bank in a given economy is vital because this role will restore stability in the financial structure of the masses. The research reviewed not only the traditional roles of the Central bank of Nigeria but also in banking sector as the financial market. Other parts plaid by the central bank of Nigeria in the development of the Nigerian economy includes: security issues, promotion of institutionalized savings, deregulation of the the financial market, nurturing of capital market institution, provision of prudential guide line and provision of research, advisory and other activities.
This study is important because it will help the government check the excess of the financial institutions with a view of reducing a stable and steady growth in our economy. More also, it portieres the relationship between the Central bank and other financial institution. The resource act as a stepping and guide to future researchers.
1.6 SCOPE OF THE STUDY
The researcher tends to point out the roles plaid by the Central bank of Nigeria in the development of the economy and the living standard of people. This is case study of the central bank of Nigeria Enugu branch. These roles will equal look at their willingness to restore the monetary stability and sound financial base in the country, the efforts being taken by the central bank of Nigeria to restore the Nara exchange rate.
1.7 LIMITATIONS OF THE STUDY
The researcher in carrying out this study encountered problems, which includes:
ii) Time and several other constraints.
i) FINANCIAL – This included lack of enough fund to move around and visit the various areas in the state, and also lack of money to buy enough research material which constitutes on impediment to researchers high cost of transportation in the city due to long distance also imposed its own limitation on the researcher.
ii) TIME – Time is also another constraints to the researcher. This is because the researcher is combining school activities and at the same time, this made him unable to cover a lot of interesting areas but therefore limited his research work only in Enugu metropolis.
Another constraint to researcher is that some of the workers find it difficult to express their problems with regards to subject matter.