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This study was designed with the aim of appraising the roles of CBN/NDIC in the management and regulation of commercial banks activities.

In order to actualize the objectives, five banks as sample were selected/chosen for analysis to assess financial institutions performance in relation to the regulatory authorities, CBN and NDIC. Various literature and theoretical issues were discussed. In addition an empirical regression and descriptive analysis was carried out to investigate how CBN/NDIC regulation variables impact on commercial banks’ activities in Nigeria. The findings from both analysis revealed that CBN structure, CBN/NDIC performance and their relationship with commercial banks had a significant impact on the management and regulation of commercial banks’ activities in Nigerian. While depositors’ protection was the only variable that had an insignificant impact on the management and regulation of commercial banks’ activities. With the aid of regression, the research was able to establish that CBN and NDIC make significant impact in commercial banking sector.

It is recommendation that continuous review of prudential guidelines and regulations in the light of dynamics of operating environment for commercial banks as well as enforcement of regulation and compliance with prudential guidelines and regulations to reduce the systematic effects and prevent deterioration in the financial condition of distressed institutions.





Title Page








  • Introduction

1.2  Statement of Problems/Questions

1.3  Statement of Objective

1.4  Statement of Hypotheses

1.5  Significance/Regulation of the Study

1.6  Scope of the Study

1.7  Limitation of the Study

1.8  Definition of Terms



2.0  Introduction

2.1  Banking Regulation Defined

2.2  Rationale for Banking Regulation

2.3  How the CBN Regulates Banks

2.4  Banks’ Regulation

2.5  How the Nigerian Deposit Insurance

Corporation Regulates Banks

2.6  CBN Monitory and Credit Policy Concept,

Administration and Guidelines

2.7  The Practice of Banking Regulation in Nigeria

2.8  How Has the Banking Industry Performed

Under Regulation

2.9  Structure of Commercial Bank

2.10 Regulatory/Supervisory Framework for

Asset/Liability Management

  • The Establishment of an Asset/Liability Management

of Committee (Policies Guidelines)

  • Increased Supervisory Responsibilities of

Central Bank of Nigeria

2.13 Core Principle for Effective Banking Supervision:

The Basle Committee Guidelines

2.14 A Review of Actions Taken By CBN/NDIC to

Tackle Distress in Commercial Banks

  • Summary of Resolution Option Implemented by





  • Introduction
  • Research Design
  • Population and Sample
  • Sampling Procedure
  • Source of Data
  • Research Instrument
  • Theoretical Framework
  • Model Specification
  • Data Presentation and Analysis



  • Descriptive Analysis

4.1  Inferential Analysis

4.2  Hypothesis Testing



  • Introduction
  • Summary of Findings
  • Policy Implication of Findings
  • Recommendation

5.4  Conclusion







Commercial banks are generally all-purpose retail bankers, Ajayi (1991). They mobilize deposits of all sizes and from all and sundry in retail as well as in wholesale markets. They engage mainly in borrowing and lending activities. The lending activities of Nigerian commercial banks have been increasing steadily over the years and recently, the pace of increase has acquired a tempo that needs some explanation.

Management of banks is the process of managing money and providing a whole gamut of banking services. Beginning with the management itself, it involves finding the optimal size and composition of banks overall assets and liabilities, Nwankwo (1991).



An essential feature of a good financial system in the banking industry is the existence and implementation of a well developed and cleared defined set of rules, regulations, enforcement of sanction in case of contravention. Since several developments in the Nigeria economy had necessitated major review of the existing rules, regulations and laws. Consequently, the CBN No. 25 of 1991 (as amended) was promulgated to give CBN wider powers to handle all issues relating to banks from licensing to liquidation.

Further development and needs to sanitize the system brought about the promulgation of CBN 1997 decree to amend the existing ones. The 1997 decree was to regulate other areas of Nigeria financial system with CBN assuming control of banks, thus a comprehensive framework for more effective supervision and optimal resolution of problems of distressed finance commenced in 1995. In this regard, the CBN has been taken over the operations of some banks, revoked the licenses of others and appointed the NDIC as a receiver and liquidator of some of these banks.

But over the years, the regulatory authorities have not performing their role creditably. They are not even functioning effectively because enabling environment is not prevalent. Prior to 1988 there was no institution to insure the depositors’ fund and as a result of the accelerated expansion of banking sector the need to insure depositors’ fund became more obvious. The Nigeria Deposit Insurance Corporation was thus established by Decree 22 of June 1988 to provide insurance cover for depositors’ fund and complement the supervisory role of CBN. Currently all institutions licensed as banks by the CBN are covered by depositors’ protection scheme.

A committee comprising representative of banking supervisions and bank examination department of CBN and NDIC was thereafter set up to draw up guidelines to assist banks examining in managing financial institutions.

To this end, this research is an attempt among others to examine management and regulation of commercial banks activities in Nigeria in order to determine their concreteness and paradigm.



The problem of this study focuses on the importance of managing and regulating commercial banks activities. To appraise the role of CBN and NDIC in the regulation of banking system in Nigeria, the following research questions are stated for consideration.

  • Have the regulatory authorities, CBN and NDIC been performing their role creditably?
  • What impact has the structure of the authorities had on the functions?
  • Would the regulatory authorities have functioned effectively if enabling environment were prevalent?
  • How does the CBN protect commercial banks depositors against loss?
  • How does NDIC protect commercial banks depositors against loss?
  • How effective has the CBN and NDIC being as regulatory/supervisory authorities?



The objective of this study is to make a comprehensive examination of the regulation of commercial banks activities. One of the main functions of commercial banks is to provide short-term and medium term loans and advances to various sectors of the economy. It is therefore obvious that its activities do not constitute any obstacle towards the realization of the objectives in regulating commercial banks of the Nigeria economy. In view of the above, the specific objectives of the study include;

  • To find out how the regulatory authorities, CBN and NDIC have been performing their role creditably.
  • To ascertain the impact of the authorities had on their functions.
  • To identify the various functions of the regulatory authorities.
  • To ascertain the CBN protection on commercial bank depositors against loss.
  • To ascertain the NDIC protection on commercial bank depositors against loss.
  • To evaluate the effectiveness of CBN and NDIC.
  • To appraise and make adequate recommendation on findings.

It is my belief that the project will be of much importance to the public to know the reasons why commercial banks in Nigeria always experience problems due to mismanagement and inadequate regulation.



For the purpose of resolving the research problems and questions articulated above, the following hypotheses were formulated and tested in the course of this study;

H0: CBN/NDIC have not performed their roles in line with the enabling Acts establishing them.

H1: CBN/NDIC have performed their roles in line with the enabling Acts establishing them.

H0: CBN/NDIC structures have no positive relationship with how well they perform their functions.

H1: CBN/NDIC structures have positive relationship with how well they perform their functions.

H0: Regulatory Acts of CBN/NDIC and BOFIA have not assisted to protect the depositors against losses of fund.

H1: Regulatory Acts of CBN/NDIC and BOFIA have  assisted to protect the depositors against losses of fund.



To analyze the management and regulation of commercial banks activities, we need to consider the role of CBN and NDIC in the regulations of the banking system in Nigeria and how the banking industry has performed under regulation and how does it benefit;

  • Government: It is expected that the findings of this research will be very useful to the government in managing and regulating commercial banks activities.
  • Investors in the Financial Services Industry: Investors especially entrepreneurs who wish to establish and run their own financial institution may find this work useful.
  • The Banking Public: This research will be useful to depositors who patronize financial institutions and commit their funds into these institutions.
  • Future Researcher: People who wish to carry out further research in this area will certainly find this work relevant.



This research is designed to cover general activities of commercial banks under the regulatory guidelines of CBN and NDIC, thus, comparing the performance of the banking activities from 1980 – 2007. Only the scope is designed to evaluate the importance of regulation in commercial banks.



The limitations of the study will reveal certain problems encountered during the course of writing the project, ranging from those encountered during the information gathering process to problem of the data itself. They include;

  • Time Constraint: The time available for this research work is very limited judging from the extent of coverage of the research. More so, the researcher combined this work with other academic work- lectures, assignment, test etc. and had to complete the research on schedule.
  • Lack of Data Bank: It was difficult for the researcher to get data and effort to obtain data. One is historically forced to move from one source to the other in an endless search of data source.
  • Historical Errors: This study will be largely dependent on facts of history reported by journals, magazines, newspapers etc. There is a small tendency that historical errors reported by these bodies might be encountered and repealed.
  • Financial Constraint: Because of the limited financial resource available to the researcher, there is constraint.


  • Management: This is a distant process consisting of activities of planning, organizing, controlling and evaluating performance to determine and accomplish the stated objectives and goals with the use of persons and resources.
  • Regulatory Authorities: This comprises of CBN/NDIC and Federal Ministry of finance. As regulatory authorities, they are jointly responsible for handling bank distress and failure resolution in Nigeria.
  • Regulations: There are rules, principles, procedures that guide the conduct of all the participants in the market. In general, it embraces all types of controls which government imposes on economic and business activities.



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