EFFECT OF DEREGULATION ON MERCHANT BANKS IN NIGERIA
EFFECT OF DEREGULATION ON MERCHANT BANKS IN NIGERIA
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Date
2000-06
Authors
ADENIPEKUN, SUNDAY ISAAC
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Abstract
Against the backdrop of sagging economic fortune which defied some "fire
brigade solutions" in the early 80s, Nigeria took a bold step in 1986 to
introduce the policy of economic deregulation under the programme called
Structural Adjustment Programme (SAP). 13 years after its introduction,
deregulation as an economic pill has proved its multiplier effect on all the
sectors of Nigeria's economy.
Expectedly, the banking industry being the fulcrum of the economy has
been more impacted by this policy. For one thing, deregulation has boosted
the number of banks in the system and for the other, it has transformed both
its market and operations considerably. Even though many banks have risen
and fallen since the commencement of deregulation, the banking industry is
today known for its discipline, increasing competition and unprecedented
hi-tech (qualitative) service delivery.
For the merchant banking sub-sector, the 13 years of deregulation has meant
more than all these. For instance, it has meant a long period of stern and
unfavourable regulatory framework which "have impacted negatively upon
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our operations" [Sani Bello, Chairman of the distressed Continental
Merchant Bank, 1990]. It has meant unequal playing field with the
commercial banking sub-sector; it has meant reduced profit margin,
comparative dismal performance, increasing loss of investors' interest,
amongst others.
Success in the merchant banking sub-sector - as opposed to the commercial
banking sub-sector - can only be qualified as pyrrhic financial success for
when it comes, it is marginal and it comes with much pain and struggle.
This explains the current spate of conversion of merchant banking
institutions to commercial banking coupled with the strident agitation for
universal or multi purpose banking [which allows a bank to perform both
merchant and commercial banking functions simultaneously] which the
monetary authorities are still resisting.
As the battles rages on, the rational question to ask is "what prospect has
merchant banking in Nigeria given this development"? This research study
answers this question and more as it explores the impact of deregulation on
merchant banking in Nigeria.
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Description
A PROJECT SUBMITTED TO THE POST GRADUATE
SCHOOL ABU, ZARIA, IN PARTIAL FULFILMENT OF
THE REQUIREMENT FOR THE AWARD OF DEGREE OF
MASTER OF BUSINESS ADMINISTRATION [MBA|
DEPARTMENT OF BUSINESS ADMINISTRATION
FACULTY OF ADMINISTRATION ABU, ZARIA
JUNE, 2000
Keywords
EFFECT, DEREGULATION, MERCHANT, BANKS IN NIGERIA