The Effect of Deregulation Policies on the Profitability of Banks in Nigeria

There are various categories of banking; these include retail banking, directly dealing with small businesses and persons. Commercial and Corporate banking which offers services to medium and large businesses (Koch & MacDonald 2010). Private banking, deals with individuals, offering them one on one service. The last category is investment banking. These help clients to raise capital and often invest in financial markets. Most global banking institutions provide all these services combined. With all these institutions in existence within the same localities and offering similar services, there is a need to regulate the industry so as to protect the consumer and provide fair working environment for all banks (Du & Girma, 2011).

Monetary Policy, in the United States, is the process by which the Federal Reserve controls the money supply to promote economic growth and stability. It is based on the relationship between interest rates of the economy and the total supply of money. The Federal Reserve uses a variety of monetary policy tools to control one or both of these.

The Banking Industry plays an important role in the economic development of the country and is the most dominant segment of the financial sector. Banks encourage economic growth by allocating savings to investments that have potential to yield higher returns. They perform their basic role of accepting deposits and lending funds from these deposits. Banks securely save the money of depositors, provide interest to them, and lend the funds raised from depositors to consumers. They are in a wide range of sizes, from large Global Banks to Regional and Community Banks. We can study the structure of an organized banking industry by taking an example of Indian banking industry:

Banking industry is currently operating in the maturity stage. There are many players as a result of which the competition is quite high. Competition is broadly based on the levels of fees charged, reputation, the range of services and products provided. As the industry consolidates and the range of services broadens, the size and geographic spread of industry players in increasing. Providing a high set of barriers is the capital and regulatory requirements within the banking sector. Entities that want to start up as a commercial bank and/or investment bank or securities dealer face significant establishment costs in order to gain acceptance and meet market reputation. Furthermore, start-ups require up-front expenses in order to establish proper distribution channels. Globalization is high and the trend is increasing. Cross-border sales and acquisitions of banking operations are also occurring, as assets are shuffled in the race to raise capital.

Deregulation is the process in which a government may remove or reduce certain restrictions in matters of business to have a more efficient operation of markets. By observing the effects that deregulation can cause on an economy, can help later generations not commit the same mistakes that the past or the current generations have done.

Nigeria has a population of around 180 million, making it the most populous country in Africa. Nigeria is located in a region with tropical climate and that can grow variety of crops. With their numerous resources and growing technology they have been able to have positive economic advancement. Nigeria has had improvements in five of the ten economic freedoms. This includes Freedom of corruption, labor freedom, and management of government spending ("Nigeria." Economy: Population, GDP, Inflation, Business, Trade, FDI, Corruption.). Nevertheless these large improvements in their economy has not brought human development, where most Nigerians live under the poverty line. This paper will focus on why Nigeria has not been able to use their economic prosperity in the sector of human development, this includes standard of living, health, safety, and basic necessity one needs to live a stable life. We will compare it to the state of Ghana whose economy has also flourished but has been success in human development.

The turmoil in the international financial markets of advanced economies, that started around mid-2007, has exacerbated substantially since August 2008. The financial market crisis has led to the collapse of major financial institutions and is now beginning to impact the real economy in the

We wish to present to you a research report regarding commercial banks and new capital regulation prepared through collective collaboration between members of group 26.

-Banks can include commercial banks, savings and loans, and credit unions. Everyday banks are used to make payments, deposits, withdraw, or talk to bankers about options. Regulations are highly important in the banking industry, protecting customers and economically. Banks gain funds by retained earnings, equity securities, savings, loans, and charging interest rates.

Athanasoglou, P. P., Brissimis, S. N., & Delis, M. D. (2005). Bank-specific, industry-specific and macroeconomic determinants of bank profitability (32026). Retrieved from Munich Personal RePEc Archive website: http://mpra.ub.uni-muenchen.de/32026/1/MPRA_paper_32026.pdf

There has been a number of banking reforms in Nigeria with varying attendant effects. However, the effect of the current reform originating from the conspicuous effect of the economic meltdown has become of great concern. While the reform of 2004 cannot be exonerated from its attendant casualties of job loss among others, the current reforms seems to have raised some dust. Following the financial stringencies in the economy and the role of banks in a depressed economy, the CBN governor, Mallam Sanusi Lamido Sanusi, on August 14, 2009 relieved some banks’ CEOs of their duties for wrong exercise of executive responsibility.

The banking sector in emerging economies has witnessed major changes to compete, attract international investment and increase capital market growth. Banking crisis usually starts with inability of the bank to meet its financial obligations to its stakeholders. This, in most cases, precipitates runs on banks, the banks and their customers engage in massive credit recalls and withdrawals which sometimes necessitate Central Bank liquidity support to the affected banks. Some terminal intervention mechanisms may occur in the form of consolidation (mergers and acquisitions), recapitalization, use of bridge banks, establishment of asset management companies to assume control and recovery of bank assets, and outright liquidation of non redeemable banks. Bank consolidation, which is at the core of most banking system reform programmes, occurs, some of the time, independent of any banking crisis. Irrespective of the cause, however, bank consolidation is implemented to strengthen the banking system, embrace globalization, improve healthy competition, exploit economies of scale, adopt advanced technologies, raise efficiency and improve profitability(eseoghene,2010). Ultimately, the goal is to strengthen the intermediation role of banks and to ensure that they are able to perform

The recent outbreak of bank mergers in Nigeria is attracting much attention, partly because of heightened interest in what motivates firms to merge and how mergers affect efficiency. However, there are often two distinct views to the rationale behind merger and acquisition. The first held view of mergers, especially those involving mega firms, is that firms are merging just to get bigger and not to get more efficient. Accompanying that notion is the fear that as merging firms grab

The Nigerian banking industry is one of the most dynamic and competitive industries in the Country. The banking industry has transformed rapidly in the last ten years, shifting from transactional and customer service-oriented to an increasingly aggressive environment in which competition for revenue is top priority.

As the economy grows and becomes more sophisticated, the banking sector has to develop parallely in a manner that it supports and stimulates such growth. With increasing global integration, the Indian banking system and financial system has as a whole had to be strengthened so as to be able to compete. India has had around two decade of financial sector reforms during which there has been substantial transformation and liberalization of the whole financial system.. Until the beginning of the 1990s, the state of the financial sector in India could be described as a