Clarifications on the Banking Sector Reforms in Nigeria
26 Pages Posted: 11 Sep 2004
Date Written: August 2004
This piece presents data published by the Central Bank of Nigeria on currency, bank deposits and other financial assets, to enable us evaluate Professor Charles Soludo's 'banking reform proposals'. We show that Soludo's proposals emanated from his misconceptions on cash, deposit-mobilization/intermediation depths, and capital adequacy of banks in Nigeria. We emphasize that going ahead with any aspect of the Soludo proposals will create problems for the banking sector in particular, and the Nigerian economy in general. We argue that we should be concerned about rebuilding the financial system, not just the banking sector. We then proceed to show in very clear terms how Nigerian financial system has evolved in the last twenty five years, why this has been the case, and what we can do to get a deeper financial system in Nigeria.
Keywords: Cash, deposits, loans, bonds, equity, intermediation, banks, inflation, Nigeria
JEL Classification: E44, G21, N27
Suggested Citation: Suggested Citation