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An Evaluation Of The Impact Of Supervision And Control Of The Central Bank On The Performance Of Commercial Banks
[A CASE STUDY OF ACCESS BANK NIG PLC LAGOS BRANCH]
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Confidence plays a key role in bank operations. Any information
whatsoever implying that the financial position of a bank has worsened
can have a negative impact on all the cash flow in that bank. Therefore,
every bank will attempt to conceal the problem of insolvency. Banks are
highly successful in this respect and therefore, the problem of
insolvency is often not recognised in time by the government agencies
entrusted with bank supervision.
Problems in the banking system or
in the economy as a whole occur when a number of banks become insolvent,
or when a relatively large share of the liabilities of the banking
system is not covered by good assets. The occurrence of such problems
indicates that the efficient asset and liability management is present
in a significant portion of banking, if a large part of banks asset is
allocated to unprofitable projects. There will be a reduction in
investment efficiency and thereby a slowdown on economic growth.
These
could be decrease or seizure of loans grants to the public when the
problems of bank insolvency begin to be resolved. When banks attempt to
restore solvency by ceasing to grant loans to bad clients and raising
the interest speeds, there is less available loan and they are more
expensive. One consequent can be the negative selection of clients.
Enterprises that do not have alternative sources of financing will be
ready to accept higher bank interests rate independently of whether the
projects to be financed are profitable or less profitable. Such a trend
could also exert a negative impact upon investment efficiency.
If
banks attempt to solve the problems of insolvency by raising additional
funds, interest’s rates will rise and there will be pressure to conduct a
softer monetary policy. Banks also seize additional liquidity in
foreign countries which affects the trends in the balance of payments.
The
right which the central bank of Nigeria has to supervise and control
the banking industry is backed by the CBN Act no 24 of 1991 now CBN ACT
2007 and the banks and other financial institution Act no 25 of 1991
(now BOFIA 2004). These laws empowers the CBN to carry out a supervisory
and control functions on all commercial banks and other banks in the
country The powers as specified by section 39 of the CBN Act which may
be expressed by the CBN from time to time in the supervisory and
controlling functions include the powers to specify critical ration to
call for information from banks and to inspect the books of any bank to
under condition of secrecy.(Afolabi 2000: 10s)
Section 30and 7 and 8
of the banks and other financial acts no. 25 of 1991 (now BOFIA 2004)
stipulates that every banks shall produce on demand all the books,
accounts documents and information as the CBN examiners may deem fit in
the exercise of his functions. It also stipulates as punishable the
wilful refusal of any bank to produce such documents as well as
negligence or wilful furnishing of false information to CBN.
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ABSRACT - [ Total Page(s): 1 ]This research project tends to evaluate the impact of supervision and control of the Central Bank on the performance of commercial banks. Access Bank Nig Plc Lagos Branch was used as the case study. To aid this research both primary and secondary data were collected. The instruments used to collect data are questionnaires and oral interviews. The respondents comprised of male and female from the bank and the population put together is 150 and sample size is 109. The research design used for this ... Continue reading---
