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THE NIGERIAN FINANCIAL SYSTEM

(COMPOSITION, STRUCTURE AND


REFORMS)
INTRODUCTION
In an attempt to carry out a comprehensive study of the financial system in Nigeria, it is highly
necessary to explain the meaning and qualities of a system. This will in no small measure support our
understanding of the dynamic nature of the financial system. According to Nzotta (1999), a system can
be defined as an organized group of components (subsystems) linked together according to a plan, to
achieve specific objects. Another point of view posits that a system is a set or assemblage of things
connected or interdependent with one another so as to form a complex unity. It could also be said to be
a whole composed of parts in orderly arrangement according to some scheme or plan. A system can
further be defined as an assemblage of objects arranged in regular subordination, or after some distinct
method, usually logical or scientific; a complete whole of objects related by some common law,
principle, or end; a complete exhibition of essential principles or facts, arranged in a rational
dependence or connection; a regular union of principles or parts forming one entire thing; as, a system
of philosophy; a system of government; a system of divinity; a system of botany or chemistry; a
military system; the solar system. From the foregoing, a system has basic components which are in a
functional relationship with each other and these have specific objectives. These components may be
simple or complex units and are usually self-regulatory and self- adjusting. Thus, from this conceptual
framework, we may surmise that systems could range from complex types like the educational system,
the economic system, the financial system, etc. to smaller system like banking system, the production
system etc.
FINANCIAL SYSTEM DEFINED
The financial system consists of various financial institutions, operators and Instruments that gives the
system its character and uniqueness. According to the Central Bank of Nigeria research series (1993)
the Nigerian financial system refers to a set of rules and regulations and the aggregation of financial
arrangements, institutions, agents, that interact with each other and the rest of the world to foster
economic growth and development of a nation. A national financial system differs from the Global
Financial System (GFS). The Global Financial System (GFS) is a financial system consisting of
institutions and regulations that act on the international level, as opposed to those that act on a national
or regional level. The main players are the global Institutions, such as International Monetary Fund and
Bank for International etc. The financial system is a prime mover of economic development. It achieves
this through the intermediation process, which entails providing a medium of exchange necessary for
specialization and the mobilization of savings from surplus units to deficit units. Through this process,
there is an enhanced productive activity and thus positively influences aggregate output and economic
growth. It means the system ensures the efficient transfer of savings from those who generate them
(savers) to those who ultimately use them (investors) for investment or consumption. Well-functioning
financial markets are an essential part of any modern healthy economy. It is through these markets that
funds are offered by the lenders/savers who have excess funds and purchased by the
borrowers/spenders who need those funds. The financial system also provides avenue for organizing
and managing the payments system, mechanisms for the collection and transfer of savings by banks
and other depository institutions; arrangements covering the activities of capital markets with respect to
the issue and trading of long term securities, arrangement covering the workings of the money market
in respect of short-term financial instruments; and arrangements covering the activities of financial
markets complementary to the money and capital markets for example the foreign exchange market,
the arrangements for risk insurance; the futures market etc. Nzotta (1999)
Empirical evidence shows that the level of financial system development in any nation is the best
indicator of general economic development potential. Goldsmith (1969), for instance posits that
financial system development is of prime importance because the financial superstructure, in the form
of both primary and secondary securities, accelerates economic growth and improves economic
performance, to the extent that it facilitates the migration of funds to the best user i.e. to the place in the
economic system where the funds will yield the highest social return. The implication here is that the
financial system will discriminate against inefficient funds users. In helping as a vehicle to economic
development, the financial system tries to achieve the basic function of resource intermediation. Here,
through various institutional structures, they vigorously seek out and attract the reservoir of idle funds
and allocate same to entrepreneurs, businesses, households and governments, for investments and use
in various projects and purposes, with a view of returns. Alternatively, they may listlessly exploit their
quasi-monopolistic position and fritter away investment possibilities with unproductive loans
(investments).Cameroon et al (1969). It is therefore an axiom that without financial wherewithal, no
business enterprise (small, medium, or big) or government can perform its productive functions
effectively and efficiently. Consequently, financial resources affect business development.

FUNCTIONS OF THE FINANCIAL SYSTEM


The financial system plays the vital role of improvement and sustains the efficient mobilization and
allocation of financial resources in an economy. The Financial system also provides structures for the
management of liquidity for financial assets and instruments The Report on the Nigeria system (1976)
succinctly articulated the functions of the financial system.
According to the report, the financial system should:
1. Facilitate effective management of the economy;
2. Provide non inflationary support to the economy;
3. Achieve greater mobilization of savings and its efficient and effective channelling;
4. Ensure that no viable project is frustrated simple for lack of funds;
5. Insulate the economy as much as possible and as much as desirable from the vicissitudes of
international economic scenes; effectively sustain the indigenization (ownership, control and
management) of the economy; assist in achieving significant transformation of the rural sector;
and assist in achieving a greater integration and linkages in agriculture, commerce and industry.
The functions above convey the enormous role the system plays in economic development. In addition
to the above, the system provides adequate hedge to risk averse investors to hold a diversified portfolio
of financial assets, as a protection against the premature liquidation of the firms in which they invested.
See Oyejide (1994).
The financial system guarantees that there is a sufficient stock of money to enhance the productive
process in the economy. An adequate stock of money ensures that there is monetary balance and
stability. Also, Oyejide further contends that the financial intermediation roles of the system (especially
banks) entail significant contributions to the process and magnitude of economic growth in several
ways:
1. They improve efficiency in resource mobilization by pooling a myriad of individual savings of
various persons;
2. They provide efficient allocation of savings into investment outlets,
3. They increase the fraction of societal resources devoted to interest yielding assets and long run
investments, which in turn augments economic growth;
4. They reduce risk faced by firms in their production processes by providing liquidity to
5. various financial assets;
6. They enable investors improve their portfolio diversification providing insurance and project
monitoring information; and
7. They induce enterprises to operate more efficiently by monitoring loan projects by offering
financial protection against premature liquidation of their capital.
Also, another point of view posits that the financial system in addition to the above issues provides the
necessary environment for the implementation of various economic policies of the government
intended to achieve non-inflationary growth, exchange rate stability, balance of payment equilibrium,
foreign exchange management, high levels of employment etc.

BASIC CHARACTERISTIC OF AN EFFICIENT FINANCIAL SYSTEM


An efficient financial system is characterized by some closely inter connected attributes.
1. A high level of confidence must be in place in the system.
2. An efficient financial system must be able to sustain the intermediation process.
3. An efficient financial system must have in place a large number of intermediaries and
participants who must stand ready to engage in healthy competition amongst themselves and
within confines and boundaries specified by law and the various professional standards in place
for the participants.
4. There should be a high degree of flexibility in the market. Also, the instruments (financial
assets) employed and the methods of operation should be market based, so that the market can
respond and adapt to changes in the economic and financial structure, no matter how small the
change may be.
5. An efficient financial system must allow for balance in operations of the market. It requires that
there should be an optimal mix of various types of financial institutions with respect to both the
transfer of current savings and the stock the past savings.

STRUCTURE OF THE NIGERIAN FINANCIAL SYSTEM


The structure of the Nigerian financial system could be viewed from the side of institutions and
structures planted for the realization of basic goals of financial intermediation. The institutions in
question operate in the financial market. Here their ultimate role is to facilitate the mobilization of
funds from the surplus units (savers) to the deficit units (investors). The sweetener is interest income
that makes the surplus units (savers) to transfer their purchasing power to the deficit units
(investors).This what is called actual resources flow from lenders to borrowers Through this the
production of goods and services is improved which also reflects on the aggregate output of our Nation.
The institutions in the Nigerian financial system are as shown below:
The monetary authorities or regulators,
The Presidency
Federal Ministry of Finance
The Central Bank of Nigeria (CBN) as the apex regulatory body in the financial system.
Institutions that provide long term funds or capital market operators,
Securities and Exchange Commission as the apex regulatory body
The stock exchange as the facilitator of trading in various listed securities
Development or Specialized financial institutions:
1. Bank of Industry
2. Nigerian Agricultural and cooperative Bank.
3. Nigerian Bank for Commerce and Industry.
4. Federal Mortgage Bank of Nigeria.
Market operators
Market facilitators

1. Issuing houses.
2. Investment managers.
Institutions that provide short term funds or money market operators.
1. Commercial Banks (universal banks).
2. Mortgage Financial Institutions.
3. Community Banks and Micro Finance Banks
4. Non Bank Financial Institutions.
5. Discount Houses
FINANCIAL INSTITUTIONS
The Central Bank of Nigeria
The CBN forms the apex bank of the countrys banking system and thus regulates and supervises the
financial and related activities of all Financial Institutions. The mandate of the Central Bank of Nigeria
(CBN) is derived from the 1958 Act of Parliament, as amended in 1991, 1993, 1997, 1998, 1999 and
2007.
The CBN Act of 2007 of the Federal Republic of Nigeria charges the Bank with the overall control and
administration of the monetary and financial sector policies of the Federal Government.
The objects of the CBN are as follows:
1. Ensure monetary and price stability;
2. Issue legal tender currency in Nigeria;
3. Maintain external reserves to safeguard the international value of the legal tender currency;
4. Promote a sound financial system in Nigeria; and
5. Act as Banker and provide economic and financial advice to the Federal Government.
Consequently, the Bank is charged with the responsibility of administering the Banks and Other
Financial Institutions (BOFI) Act (1991) as amended, with the sole aim of ensuring high
standards of banking practice and financial stability through its surveillance activities, as well as
the promotion of an efficient payment system.
In addition to its core functions, CBN has over the years performed some major developmental
functions, focussed on all the key sectors of the Nigerian economy (financial, agricultural and industrial
sectors). Overall, these mandates are carried out by the Bank through its various departments.

Other category of Financial Institutions been supervised by The Central Bank of Nigeria includes:
1. Bureaux-de-Change (BDCs)
2. Commercial Banks
3. Development Finance Institutions. (DFIs)
4. Discount Houses
5. Finance Companies (FCs)
6. Merchant Banks
7. Micro-finance Banks (MFBs)
8. Non-Interest Banks
9. Primary Mortgage Banks (PMBs)

Commercial Banks
A commercial bank is a type of bank that provides services such as accepting deposits, making business
loans, and offering basic investment products. Commercial bank can also refer to a bank or a division
of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to
individual members of the public (retail banking).

History of Commercial Banking in Nigeria:


Commercial banking activities started 1892 with the establishment of the African Banking Corporation
ledger depositor and Co. A shipping company based in Liverpool was instrumental in its formation.
This bank was however, taken over in 1984 by the bank of the British West African which later became
standard bank and now first bank of Nigeria Plc with the bank on observation. The next was Barclays
bank and company (now Union bank of Nigeria Plc) was established in 1917. These banks were set up
to provide banking services for the British Commercial interest and the colonial administration in West
African when the west African currency board (Gyasi Central Bank) was set up in 1912, the bank of
British became the agent of the currency board. The National Bank of Nigeria came into existence in
1933 as the first indigenous bank that was to survive other banks that were established before that time
including the merchant banks, failed as a result of inadequate capital, fraudulent practices and poor
management.
After the Second World War, economic activities and with high export prices, many Banks grow up in
the Nigeria economy. Between 1945 and 1947, four (4) other indigenous bank, Africa Continental Bank
(ACB) Agbenmagbe, Nigeria farmers and commerce bank were established but only two were able to
survive the African Continental Bank and Agbenmagbe Bank (Now Wema Bank). The period (1945
1952) was a period of free for all banker. In the period (1905 1975) alone 18 banks were established
but by 1975 most of them had gone to liquidation or close down by the police or never started business
at all. A lot of factor lead to the fall of these banks must had insufficient capital, most expanded their
offices too rapidly to cover trading and these were no banking regulations to specify the code of
conduct. Nigeria commercial banks have been divided into two (2) main categories namely:-
Indigenous bank (owned 100% by Nigerians) and Mixed banks (with majority indigenous shareholders
at least 60%) Nigerian law does not allow any foreign bank with a majority foreign interest.

Table2.1 Number of banks in Nigeria from 1970-2012


Year Commercial banks Merchant banks Total number of banks

1970 14 1 15
1971 16 1 17
1972 16 1 17
1973 16 2 18
1974 17 4 21
1975 17 6 23
1976 18 5 23
1977 19 5 24
1978 19 5 24
1979 20 6 26
1980 20 6 26
1981 20 6 26
1982 22 8 30
1983 25 10 35
1984 27 11 38
1985 28 12 40
1986 29 12 41
1987 34 16 50
1988 42 24 66
1989 47 34 81
1990 58 49 107
1991 65 54 119
1992 66 54 120
1993 66 54 120
1994 65 51 116
1995 64 51 115
1996 64 51 115
1997 64 51 115
1998 51 38 89
1999 57 33 90
2000 56 34 90
2001 90 _ 90
2002 90 _ 90
2003 89 _ 89
2004 89 _ 89
2005 25 _ 25
2006 25 _ 25
2007 25 _ 25
2012 21 _ 21
Note: From 2012 to date, there is no distinction between commercial and merchant banks. Source:
CBN Statistical Bulletin

FINANCIAL SECTOR EVOLUTION, REFORMS AND GLOBAL FINANCIAL CRISIS IN


NIGERIA
Financial Sector Evolution
In any economy, the financial sector is the hub of productive activity. It comprises of an impressive
network of banks and other financial institutions and a wide range of financial instruments. In Nigeria,
the financial system is made of financial institutions, such as banks, insurance companies, specialized
banks, capital market, finance companies, discount houses, bureau de change, mortgage institutions,
community banks, and the development finance institutions (DFIs), each covering a particular area of
activity or activities (Mordi, 2004). It performs the core function of financial intermediation, adequate
payment services as well as the fulcrum for monetary policy implementation.
The Nigerian financial system has undergone several evolutionary stages ever since the independence
of the country; foundation phase, Expansion phase, Consolidation and Reform phase (Ibid.). The
phases marked different epochs in the evolution of the financial system.

1. Foundation Phase
This phase focuses on the establishment of institutions and development of necessary legislative
framework. The phase is approximately from 1950 to 1970. During this period, the Central Bank of
Nigeria (CBN), the apex regulatory authority in the Nigerian financial sector was established. The CBN
derives its legal authority from the CBN Act No. 24 0f 1991 (Amended in 1997, 1998, and 1999) and
the Banks and Other Financial Institutions Act (BOFIA) No. 25 of 1991 (Amended in 1997, 1998 and
1999) and presently the CBN Act 2007, which preceded the CBN Act of 1958 and Banking Act of
1969.
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2. Expansion Phase
The expansion phase was directed at availing the public of banking activities and this was facilitated by
the increase in network of branches. This involves the expansion of banks branches into the rural and
semi areas.
The phase also witnessed priority lending to some sector of the economy. This phase takes
approximately from 1970 1985.
3. Consolidation and Reform Phase
The Structural Adjustment Programme (SAP), which started in 1986, marked an era in Nigerias
financial sector reform. The monetary authorities relaxed the control and liberalize the sector. There
was a deregulation of the economy and many institutions were set-up to regulate the growing financial
sector. For example, there was the establishment of Nigeria Deposit Insurance Corporation (NDIC) in
1988, the Security and Exchange Commission (SEC) though established by SEC Act of 1979 but was
further strengthened by SED Act of 1989 and Investment and Securities Act No. 45 of 1999.

FINANCIAL SECTOR REFORMS


A peculiar feature of the reform program in Nigeria is the associated inconsistency in policy
implementation.
The financial sector in Nigeria is dominated by the banking sector, especially the commercial banking.
The deposit money banks (DMBs) accounts for 93.0 per cent of non-central assets in 2000 (World
Bank, 2000) and 94.0 and 95.2 per cent of the aggregate financial savings in 2002 and 2003,
respectively as well as above 60.0 per cent of the stock market capitalization (Note 4). Commercial
banking started in 1892 with the establishment of the first banking firm, Standard Bank of Nigeria Ltd
(now First Bank). Since then, the number of commercial banks has exploded. Thus, an understanding
of the structural changes in the financial sector as a whole is of great importance to all stakeholders; as
it would help in designing appropriate legislation to enhance competition. The Nigerian banking system
has undergone remarkable changes over the years, in terms of the number of institutions, ownership
structure, as well as depth and breadth of operations. These changes have been influenced largely by
challenges posed by deregulation of the financial sector, globalization of operations, technological
innovations and adoption of supervisory and prudential requirements that conform to international
standards.

1986 Reforms
At the commencement of comprehensive financial sector reform in Nigeria in 1987, the sector was
highly repressed. Interest rate controls, selective credit expansion and use of reserve requirements and
other direct monetary control instruments were archetypal characteristics of the financial system.
Access into banking business was limited and government-owned banks dominated the industry. The
reform of the foreign exchange market, which until then was also controlled, began in 1986. Indeed, the
financial sector reform was a component of the comprehensive economic reforms programmed,
Structural Adjustment Program (SAP), which was adopted in 1986.
Although the policy planks of SAP in Nigeria were the prototype prescriptions of the Bretton Woods
institutions, the program was sold to Nigerians by government as Nigerias alternative to IMF loan-
based adjustment. The introduction of the program was on the heels of the rejection of IMF loan
package with its conditionalities, a decision that reflected the consensus of a nationwide debate. The
main financial sector reform policies applied were deregulation of interest rates, exchange rate and
access into banking business. Other reform measures Included, establishment of Nigeria Deposit
Insurance Corporation (NDIC), strengthening the regulatory and supervisory institutions, upward
review of capital market deregulation and introduction of indirect monetary policy instruments. Some
distressed banks were liquidated while the Central Bank of Nigeria took over the management of
others. Government share holdings in some banks were also sold to the private sector. The reform of
the foreign exchange market in 1986 began with the dismantling of exchange controls and
establishment of a market-based autonomous foreign exchange market. Bureau de changes were
allowed to operate from 1988. However a fixed official exchange rate has continued to exist alongside
the autonomous market.
In 1994, the gradual market-based depreciation in the official exchange rate was truncated by a sharp
devaluation in a bid to close the widening gap between the official and the autonomous exchange rate.
Unsatisfied with the observed further widening of the gap between the two exchange rates, government
outlawed the autonomous foreign exchange market and reintroduced exchange controls in 1994. But
after a full year of exchange controls, the autonomous market was brought back in 1995 to co-exist
with the fixed official exchange rate. The continued operation of the official exchange rate brings with
it a great deal of distortions in the domestic allocation of resources within the public sector. This is very
pronounced in the vertical distribution of export earnings among the three levels of government. A
similar pattern of policy reversals applies to the reform of interest rates. First introduced in 1987, the
market-determined interest rates ruled until 1991 when interest rates were capped. But after only a year
of controls, market forces were permitted once more to determine all interest rates in 1992 and 1993.
While indirect monetary instruments (open market operations) have been initiated since 1993, some
measures of controls such as sectoral credit allocation guidelines have continued to be applied. In the
sphere of bank licensing and regulation, the reform was ushered in with deregulation of bank licensing
in 1987. When the increase in the required banks paid up capital in 1989 and the reform of their
accounting procedure (1990) appeared insufficient to curb the excesses of the sector, government
placed total embargo on bank licensing in 1991 In Nigeria, the liberalization of interest rates and entry
into banking business gave rise to sharp increases in nominal interest rates. With the additional effects
of currency devaluation and higher Central bank-financed public sector deficits within the period, the
rate of inflation soared.
However, despite the SAP Reforms, the seemingly lackluster performance of banks in lubricating the
economy was the precursor to the emergence of widespread banking crisis in the early 1990s. The
linkage between the sector and the growth of the economy remained weak throughout this period. Not
only was industrial finance appalling, the cost of capital was prohibitive. The Nigerian banking system
has undergone remarkable changes over the years, in terms of the number of institutions, ownership
structure, as well as depth and breadth of operations. These changes have been influenced largely by
challenges posed by deregulation of the financial sector, globalization of operations, technological
innovations and adoption of supervisory and prudential requirements that conform to international
standards.
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2004 Reforms
Prior to the reforms started in 2004, the Nigerian banking sector was still weak and fragmented, often
financing short-term arbitrage projects rather than productive private investments. For clarity, we can
summarize the major problems of many Nigerian banks as follows:
1. Weak corporate governance, evidenced by high turnover in the Board and management staff,
inaccurate reporting and non-compliance with regulatory requirements, falling ethics and de-
marketing of other banks in the industry;
2. Late or non-publication of annual accounts that obviates the impact of market discipline in
ensuring banking soundness;
Gross insider abuses, resulting in huge non-performing insider related credits;

1. Insolvency, as evidenced by negative capital adequacy ratios and shareholders funds that had
been completely eroded by operating losses;
2. Weak capital base, even for those banks that have met the minimum capital requirement, which
currently
3. stands at N1.0 billion or US$7.53 million for existing banks and N2.0 billion or US$15.06
million for new banks, and compared with the RM2.0 billion or US$526.4 million in Malaysia;
and
Over-dependency on public sector deposits, and neglect of small and medium class savers.

CBN assessment of 2004 shows that while the overall health of the Nigerian banking system could be
described as generally satisfactory, the state of some banks were less cheering. Specifically, as at end-
March, 2004, the
CBNs ratings of all the banks, classified 62 as sound/satisfactory, 14 as marginal and 11 as unsound,
while 2 of the banks did not render any returns during the period. The weaknesses of some of the ailing
banks were manifested by their overdrawn positions with the CBN, high incidence of non-performing
loans, capital deficiencies, weak management and poor corporate governance.
The poorly managed liberalization reform of the 1980s is partly responsible for the sectors
weaknesses mentioned above. Supervision remained weak and there was evidence that many banks had
bad balance sheets, conducting only very limited lending to the private sector, while engaging in short
term foreign exchange arbitrage. To strengthen the financial system and improve on the ending to the
private sector; the consolidation exercise was launched in mid 2004. The CBN required all deposit
banks to raise their minimum capital base from about N2 billion to N25.0 billion by the end of
2005(Note 5). The banking sub-sector reform of 2005 was adjudged as most successful, with the
emergent of 24 strong banks (down from 89), larger capital base (from under US$3.0 billion to over
US$9.0 billion), rating of Nigerian banks by international rating agencies (S & P; Fitch) for the first
time, branch network increased from 3,200 in 2004 to 3,866 in April 2007. The 919 Community/Micro
Finance Banks (capital requirement about US$156,000) and 11 banks had market capitalization ranging
between US$1.0 billion and US$5.3 billion (Soludo, 2007).
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Also, the insurance sector went through the process with only about 71 insurance companies sailing
through. The industry is now recapitalized to the tune of over N200.0 billion from the pre-consolidation
position of just N30 billion. These reforms were complemented by improved regulatory and oversight
function by the Central Bank.
The Bank started the process of migration from a prudential supervision system to a risk based
approach within the framework of the Basel II Accord. Various measures were similarly implemented
to ensure a smooth liquidation of banks that failed to meet the capitalization requirements. Three
important legislations (CBN/BOFI Act, NDIC Act and Microfinance Act) were submitted to the
National Assembly to strengthen the Consolidation programme. The bills sought to improve the
autonomy of the Central bank in its monetary policy decisions; comprehensive framework for
addressing the case of private depositors, who may be affected by the liquidation process; and to
support the development of the microfinance industry in Nigeria.

2009 Reforms
Eight main interdependent factors are believed to have led to the creation of an extremely fragile
financial system that was tipped into crisis by the global financial crisis and recession. These factors
include;
1. Macroeconomic instability caused by large and sudden capital inflows; major failures in
corporate governance at banks;
2. Lack of investor and consumer protection; inadequate disclosure and transparency about the
financial position of banks; critical gaps in regulatory framework and regulations; uneven
supervision and enforcement;
Unstructured governance and management process at the CBN; and weaknesses in the business
environment in the country.
The Central Bank of Nigeria (CBN) in response to the above problems, unveiled a ten-year reform blue
print anchored on four cardinal reform programmes for the stabilization of the banking sector and the
finance sector ingeneral. The four cardinal programmes for the sectors transformation involves
1. Enhancing the quality of banks;
2. Establishing financial stability;
Enabling healthy financial sector evolution and ensuring that financial sector contributes to the
real economy.
The CBN plans to initiate a five part programme to enhance the operations and quality of banks in
Nigeria, which would consist of industry remedial programmes to fix the key causes of the crisis,
implementation of risk based supervision, reforms to regulations and regulatory framework, enhanced
provision for consumer protection and internal transformation of the CBN(Note 6). It would also
include the development of directional economic policy and counter-cyclical fiscal policies by the
government and further development of capital markets as alternative to bank funding. Some of the
potential levers for the new macro-prudential rules may include
1. Limiting capital market lending to a set proportion of banks balance sheet,
2. Prohibiting banks from using depositors funds for proprietary trading, private equity or venture
capital investment,
Adjusting capital adequacy and forward looking capital requirement driven by stress tests by the
CBN.
Although, the financial system has undergone substantial changes over the last two decades, the system
remains by and large unstable and under-developed, since it is yet to achieve that degree of financial
intermediation, which the economy requires to foster growth and development.