THE IMPACT OF DEREGULATION OF THE ECONOMY ON NIGERIA COMMERCIAL BANKS (A CASE STUDY OF FIRST BANK NIGERIA PLC)

ABSTRACT
The economy of Nigeria has a lot of structural distortion is the 1980’s. The economy policies pursued prior to 1985 made the Nigeria economy price distortions created by a highly over-valued currency and inappropriate pricing of agricultural and other local products.

The control measure introduced prior to deregulation of the economy were unable to improve the economy positively, instead, that period was characterized by short- supply of industrial inputs. Plant closure, large retrenchment of workers, shortage of goods and price inflation with unfavourable balance of payment.

The Federal Government has pursued vigorously the policy of deregulation of the economy. The structural adjustment programme was designed to attack and remove the Fundamental structural distortions prevalent in the Nigeria economy. Commercial banks should equally anticipate and sensitize itself with the challenges of a deregulated economy.

The major deregulation policies used were deregulation of interest rates structure, introduction of second tier foreign exchange market.

Since the Federal Government is contemplating deregulation as the only paramount solution to the distorted economic structure. The banking Industry (Commercial Banks) need to reposition itself to take full advantage of the gains that might arise from such deregulation. Commercial banks should equally anticipate and sensitize itself with the challenges of a deregulated economy.

APPENDIX 11
QUESTIONAIRE ADMINISTERD AMONG THE BANKING PUBLIC

Dear sir/ Madam,
This questionnaire is part of a research into the deregulation of the economy on the financial performance of commercial Bank.

The research is in partial fulfillment of the requirement for the a ward of a Higher National Diploma (H.N.D) In Banking and Financial Department of the Federal Polytechnic Nekede,

Kindly read each question and briefly express your opinion, your honest and Unbiased opinion is highly solicited for as they will help me with date will be treated in strict confidence.
Thanks for your cooperation.
NEAMADI CHIGOZIE .M.

TABLE OF CONTENT

Title page i
Approval page ii
Dedication iii
Acknowledgement iv
Abstract v
Table of contents vi
CHAPTER ONE
1.0 INTRODUCTION
1.1 Statement of problem
1.2 Purpose of study
1.3 Significance and relevance of study
1.4 Scope and limitation of study
1.5 Formulation of Hypothesis
1.6 Research methodology
1.7 Definition of terms
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 The History of Banking in Nigeria
2.2 Functions of Commercial Banks in the Development of Nigeria Economy.
2.3 The Concept of Structural Adjustment programmed (SAP).
2.4 The Concept and Areas of Deregulation in the economy.
2.5 The Role Central Bank in the Deregulation of the Economy
2.6 Effects of Deregulation of the economy on Commercial Banks.
2.7 Challenges and Achievement of Commercial Bank under an Environment of Deregulation.
2.8 A Comparative Analysis of Commercial Banking in an Regulation and Deregulation.

CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Research Designs
3.2 Sample size
3.3 Source of Data
3.4 Data Collection Method
3.5 Technique of Data Analysis

CHAPTER FOUR
4.0 DATA PRESENTATION AND ANALYSIS
4.1 Data presentation
4.2 Data Analysis
4.3 Test of Hypothesis

CHAPTER FIVE
5.0 SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary of general findings
Conclusion
Recommendation
Bibliography
Appendix- Questionnaire
CHAPTER ONE
1.0 INTRODUCTION
The economy of Nigeria had a lot of structural distortions in the 1980s. The economic policies pursued prior to 1985 made the Nigeria economy vulnerable to external shock. Consequently the 1986 budget sought to de-emphasized controls and adopted policy measures aimed at expanding the economy resource balc. To attain this goal the 1986 budget at a tone in the structural adjustment programme which was launched in July 1980 with the introduction of structural adjustment programme came to deregulation of the Nigerian economy.

The deregulation policy which the structural adjustment called for is the process by process by which government remove selected regulations in bull-mess or order to encourage the efficient operation of market.

The theory is that fever regulations will lead to a raised level of competitiveness, therefore higher productivity, more efficiency and lower price overall. The deregulation policy was deigned to.
i. Restructure and diversity the productive base of the economy in order to reduce dependency on the oil sector.
ii. To achieve focal and balance of payment viability.
iii. To lay the basis for sustainable non- inflationary or minimal inflationary growth rate.
iv. To lesion the dominance of unproductive investment in the economy, improve the sectors efficiency and intensity the growth the sectors efficiency and intensity the growth potential of the private sector. The listed aims are not exhaustive.
The banking industry which is a major instrument through which government execute their policies, need to appropriately reposition itself to take full advantages of the gains that might arise from deregulation, as well as face the challenges.

Deregulation of the economy will definitely prose some challenges to the banking industry. However the ability to copy with the challenges which will come in the form competitive lending rates, effective management of credit risk, level of expertise in investment banking and cooperate finance activities will all be the important determinant of success for banks.

As a financial intermediary, commercial banks are expected to witness an increase in credit request with concessionaries interest rate. This is as a result of high rate of return that is expected from deregulation of the economy, especially toward deregulation of petroleum products which will definitely attract investors. This is where in the banking industry come in.

The project will therefore aim at analyzing the effect the deregulation of the economy will have on activated of commercial banks.
1.1 STATEMENT OF PROBLEM
Due to the underdeveloped nature of Nigeria banking system it is sometime said that banks have not met the standard expected to them in the process of economic development especially with the introduction of deregulatory policy. There are many problems which the commercial bank is not exception some of the problem to be treated in the text which of course threatens the financial performance of commercial banks are as follows.
The reluctant competition between commercial banks as a result of the deregulatory policy and the possibility of bank failure which prompted the Federal Government to establish the Nigeria Deposit insurance corporation.
i. Ability to cope with the high demand for bank loans with competitive lending rate.
ii. The level of expertise in investment banking and corporate finance.
iii. Ability to effectively manage credit risk these with other problems threatens the financial performance to commercial bank due to the introduction the deregulation of the economy.



1.2 PURPOSE OF THE STUDY
The general purpose of this study is to examine the performance of commercial banks under a deregulated economy with a view of assessing, the effect, challenges, and benefits as well as achievement such deregulation will pose on commercial banks.

This study attempt to critically identify and analyze the impact of government deregulation of the economy on commercial banks with the aim making useful recommendation son how to improve commercial bank performance.

Emphasis will also be made on the current banking practices and habit as means of battling with the challenges and the threats deregulation has brought with it. Also to identify the various achievements made with the inception of the policy as well as to examine how effective commercial banks have been since the inception of the policy.

Furthermore this text will try to compare the activities of commercial banks under the system of regulation and deregulation and deregulation in order to know if the main objective of the policy is been achieve. Recommendation that will enhance the efficiency of banks operations will equally be made.
1.3 SIGNIFICANCE AND RLEVANCE OF THE STUDY
The findings of this work will contribute to knowledge in the subject matter, other researcher students and the entire public will hopefully benefit from this study since it will form the basis for other research for other research work.

1.4 SCOPE AND LIMITATION OF THE STUDY
This study will cover a period of four year period (2000-2004) and a case study approach using first Bank Plc will be adopted. This project will concern itself with the financial performance of commercial banks as measured by a study of the effect of economic deregulation of the various activities of commercial banks.

In order to obtain a broader picture of the effect the deregulations of the economy have on commercial banks. Question arises will also be administer on some other selected banks, in Owerri.

However emphasis on the research will be based on First Bank of Nigeria Plc Owerri

The study will be constrained by the following:
i. The policies and conventions employed by first banks of Nigerian Plc will not necessary be the same as those used by other banks.
ii. The deregulation policies as used by the Federal Government through central bank of Nigeria on a regular basis. There is the possibility that not all policies will be available for this study.
iii. Lack of access to computation and compulsivity of handling multivariate data analysis may pole the greatest problem for the study.
Due to the time limitation and financial constraint it will not be possible in visit more than three commercial banks with concentration on first Bank of Nigeria Plc Owerri.
1.5 FORMILATION OF HYPOTHESIS
The following hypothesis will be tested.
i. The deregulation of the economy resulted in an upsurge I n the number of commercial banks in the country.
ii. The deregulation of the economy has resulted an increase in commercial banks profitability.
iii. Deregulation of the economy has led to a shape increase in banks bad and doubtful dept.
The research shall restrict itself with the use descriptive hypothesis. The null and alternative hypotheses which are normally used in statistical testing will be use, with null hypothesis represented as Ho and alternative hypothesis represented by H1.
1.6 RESEARCH METHODOLOGY
The research methodology will involve the collection of data through oral interviews to top management staff of some commercial banks, namely spring bank guarantee truest bank first ban al in Owerri.

Questionnaire will also be administered to the staff of there banks s well as the use of their financial statement. The researches will analysis the banks records from 200-2004 (A period of form years) both years inclusive.

The research will adopt the case study approach in its analysis and First Bank of Nigeria Plc, Owerri branch will be used as the case study. Major analysis will be based on information received from First Bank Plc, Owerri branch.
1.6 DEFINITION OF TERMS
1. Collateral: An item of value demanded by banks as security for loans granted to customers.
2. Credit: Money created by commercial banks through the media of loans and discounts granted to customers.
3. Data: Any kind of information (numerical or non- numerical) relevant to research.
4. Data Analysis: Critical examination of data with explanations and interpretations of research data.
5. Interview: Discullion or conference between two or more people either buy face to face or through a medium such at telephone.
6. Loan: Money lent to customer by banks
7. Over draft: Amount of money by which a bank account is been overdrawn by a customer.
8. Advance: Money paid before the due date.
9. Bank: An institution which borrows money from the public and also lend it to the public.
10. Commercial Bank: Banks designed to lend short term loan and overdraft to their customers.
11. Concept: A term having universal acceptable definition or meaning.
12. Delimitation and limitation: Constraints or problem the research encountered in the course of the research.
13. Population: Totality of all items under study.
14. Primary Data: Data that is made use of by the same person who collected it.
15. Research: Investigation under taking to discover or confirm the existence of something, or to get additional information or knowledge about something.
16. Methodology: Procedure and technique used, including problems encountered in the course of the research.
17. Questionnaire: List of questions in a printed form administered to respondents.
18. Sample: Traction or part of the population taken in a specified, manner.
19. Null Hypothesis: A statistical hypothesis formulated for the purpose of rejecting or nullifying the hypothesis.
20. Oval interview: Face to face interview with the respondent.
21. Respondent: People (Sample of the population) who respondent to the questionnaire or were interviewed.
22. Variable: Any feature possessed by members of a population that differed from one another.
23. Return: The measure of profitability on investment.
24. Ratio: A sample mathematical expression of the relationship of one item to the other.
25. Trend: Time movement in a set of observation taken at specified time period usually at equal intervals.
26. Interest Rate: Rental payment for the use of credit y borrows and returns for parting with liquidity by lenders.

CHAPTER TWO
2.0 LITERATURE REVIEW
The significance of reviewing past works, cannot be over emphasized. This will no doubt help the researcher lean from the previous work on the subjects in order to have a from and proper grip on their own present related study.

According to Orji (1987), financial depression refers to the distortion of domestic financial market through measured such as calling on interest rate and credit expansion, selective allocation of credit and high reserve requirement. Orji pointed out that misguided policies have damaged the economy of Nigeria by reducing saving activities.

The standard recommendation therefore is the proper deregulation of the economy which will definitely affect the financial sector.

According to Adekanye (2002) the deregulation policy was adopted in 1987 against a crash in the international oil market and the reactant deteriorating economic condition in the country due to stringent policies in the financial sector. Adekanye pointed out that the policy was adopted to achieve fiscal balance and balance of payments viability as well as liberalization of the financial system by altering and restructuring the production and consumption patter of the economy, eliminating price distortions, reducing the heavy dependency on crude oil export and consumer goods importation, enhancing the non-exports base and achieving sustainable growth.

According to Ebhodeghe (1990) the deregulation measure has continued to pose profound environment challenges to the banking industry.

The liberalization of the financial system has led to the massive protuberating of banks with its attendant consequences of tight competition for fair market share of the public fund, competitive interest rates as well as executive reliance on economic rather than prudential regulation, which should focus on bank solvency and credit risk.
(Ebhodoghe) went further to say that deregulation has been closely linked with banks failure the said that the reason for such assumption was due to the simultaneous occurrence of the time events. Deregulation is often accompanied by increase market competition.

As deregulation compels banks to compete with one another for core deposits, their level of exposure to risk may increase as the spread between the cost of fund and the return on fund is narrowed moreover banks may tend to assume more risk in order to keep profitability measure ups either by diverting funds in their loan and investment portfolios to higher risk / return opportunities.

Ebohodoghe therefore pointed out that the path that will return the country as well as the banking industry to rapid low- run growth is cuvesomely realistic exchange rate, balanced budget and a favorable investment climate
2.1 THE HISTORY OF BANKING IN NIGERIA
The bulliness of banking according to Orji (1987(came into Nigeria as a result of the West Africa province trade in the cuinea coast 9Nigeria) and the gold coast (Ghana). So trade was the main factor that necessitated the establishment of banks. Elder Dumpster and company was one of the major European shipping and trading organizations that was in the fore front in the drive to establish the banking industry in Nigeria.

Banking operations have existed for more than a country in Nigeria. Its existence can equally be paced to the early colonial period. According to Onyemcikeya (20002) the decline banker system of rate and rise in financial transaction of the then colonial government required an institution in the form of banking to provide for safety and easy transfusion of finds. The above through does not preclude the fact that the business of banking in its various forms had been going on in Nigeria for many centuries. The evolution of Nigeria western style of banking can be classified into two broad stays. The prelegislative and the legislative stages.
a. PRE-LEGISLATIVE STAGE
This stage in banking industry is the period before the enactment of the 1952 banking ordinance. The period was characterized by the absence of any African currency board and the establishment of the biggest foreign banks.

During this period anyone could set up a banking business provided it was registered under the company’s ordinance. Also banks could transact any type of business with out any restriction except under the stamp duties ordinance (N05 of 1939) which restricted banks from cluing the bank of England notes.

This period also saw the establishment of both foreign and indigenous bank. The very first bank to be established in Nigerian was the African banking co-operation by Elder Dampster and company in 1892. This was taking over in 1893 by the bank of Bank of British West African which was established in the same year. It remained the only bank in Nigeria till it was joined by Bardays banks Dominion, colonial and over seas in 1912. The Bardays bank became part of Barday group of banks in 1925,

Third foreign bank that was established was Birth and French bank in 1954 National bank of Nigeria was established in 1933 as the first indigenous bank. The second was the Africa. Continental bank some other indigenous bank were the Agbanmagbe bank which was established as a private company in 1945. The Nigeria farmers and commercial bank established in 1950s experienced a number of bank failure with of indigenous bank failed with very few surviving. The experience created a lot of public indignation and concern many lost confidence is the banks as a result this, the government started enacting number of legislation. Like the ordinance of 1952, 1958 and banking decree of 1969.
b. LEGISLATIVE STAGE
This stage begins with the promulgation of the 1952 banking ordinance. That ordinance defined a bank and its business and it also specified the amount of authorized capital of both indigenous and foreign banks.

This began the period of legislative regulation of banking activities in Nigeria. Another regulatory body was established in 1959, this was the central bank of Nigeria (CBN) it was Gimed at developing in banking system.

In 1973, the Federal government in pursuance of its indigenous policy, decided to also indigenes the banking industry so in that year it took enough percentage interest in the foreign banks in the country to raise total indigenous ownership to 401 which was later increased to 601. in 1976 under the second phase of the (Indigenous) section exercise by soon in the number of state government owned bank that were being established.

The financial system review committee was set up by the federal government in 1976 to review the Nigeria financial system. This committee submitted its report in December 1976. The Nigeria banking industry experienced tremendous growth during the period of legislative control especially since the deregulation of Nigeria economy in 1986, define 1986, there were only forty banks in the country. But with the introduction of deregulation policy it increased to 110 as at the end of 1990. Presently it has reduced to 90 following the recent bank failure.
2.2 FUNCTIONS OF COMMERCIAL BANKS IN THE DEVELOPMENT OF NIGERIA ECONOMY

Commercial banks have long been recognized to play an important role in economic development of Nigeria economy. This recognition dates bank to goldsmith (1955) which demonstrated that commercial banks could be a catalyst of economic growth if it is well developed and healthy.
Commercial banking is the oldest of all the banking institutions in Nigeria with the first commercial bank being established in 1892. Commercial banking is the most important financial institution and also the most popular with the Nigeria public it is unique in its performance of services. According to Osubor (1951: 25) commercial bank are destiny wished financial institution. Through its savings mobilization and efficient financial intermediary roles.

Commercial banks activities towards the development of Nigeria economy could be seen firstly, through the financial intermediary functions saves and borrowers are linked up and this reduces transactions and search cost.

Secondly, they create liquidity in the economy by borrowing short term and lending long-term.

Thirdly, they reduce information costs, provide risk management services and reduce risk involved in financial transactions.

Fourthly the intermediaries bring the benefits of assets diversification to the economy. Fifthly they mobilize savings from atomized individual for investment, thereby solving the problem of indelibility in financial transactions finally mobilized saving are invested in the most productive venture irrespective of the sources of the saving.

The above benefits of financial intermediation translate into the economy wide benefit which motivates financial reforms where the system is considered underdeveloped. These are to: increase the size domestic saving channeled through the financial sector.
Improve the efficiency of financial intermediation enhance the effectiveness of monetary policy. Based on these expectations commercial banks could be considered as:
The only bank that words the Nations money supply
The only financial intermediary whose demand deposit circulates as money.
The only bank whose lending can create additional bank deposit through redeposit of the money by the borrower unwell the public chose to hold money.
2.3 THE CONCEPT OF STRUCTURAL ADJUSTMENT PROGRAMME (SAP)

By the end of 1985 there were considerable disenchantment both in the government and private with the use of wide- ranging controls as a tool of economic management, particularly which the renewed ware of control between 1982 and 1985. Failed to stem the deteriorating external payments problems of that period. Though this control did to some extent assist in reducing excessive foreign exchange expenditure cost to the economy was enormous.

Economy control measure made the Nigeria economy vulucrable to external shocks like price distortions creased by a highly over- valued currency and inappropriate institutional governments which led no inadequate pricing of agricultural and other local products. The control measure only encouraged the setting up of manufacturing venture based on the wholesale imported inputs. It was against this background that in 1986 budget set the tone for the structural Adjustment programme (SAP) which was launched in July 1986.

Economic deregulation in contrast to economic control was the philosophy behind structural Adjustment programme. The main aim of SAP was the adoption of appropriate pricing policies in all sectors of the economy with greater reliance on market find and reductions in complex administrative controls with a view to rationalizing use if scarce resources, promoting economic diversification and stimulating production.

According to A Ahmed (2003)SAP was designed to attract and remove the fundamental structural distortional prevalent in the Nigerian economy since the 1970s. The main policy instruments of the structural Adjustment program include the sale of foreign exchange by action, abolition of exchange controls. Import licensing, monetary and credit restraint, privatization and commercialization of public sector enterpriser, debt rescheduling and debt conversion.

The broad strategy of the structural adjustment programmes as an operational concept had the following basis elements.
i. The setting up of a second tier foreign exchange market as a mechanism for achieving realistic exchange rate for the naira and ensuring a more efficient allocation of scare foreign exchange resources.
ii. The adoption of light fiscal and monetary policy
iii. Dismantling of price, trade and centralized exchange controls.
iv. Rationalizing and selective commercialization and privatization of public enterprise.
v. Over having of the administrative structure



2.4 THE CONCEPT AND AREAS OF DEREGULATION IN THE ECONOMY

There is no doubt that the prior exultance of an unstable macroeconomic environment and weakness in the economics structure of Nigeria led to the introduction of the deregulation policy. The introduction of the deregulation policy is aimed at eliminating the inadequacies and distortion and distortion of the old control system.
Deregulatory policy which deals with the removal of selected regulation in business by government were aimed at attaining a realistic naira exchange rate.

These deregulatory rationalization of tariffs to estimations and diversify domestic production, dismantling of administrative controls production and specification of procedures, liberalization of and increased reliance upon market forces for the determination of the patter of resources allocation.

These deregulatory measures were designed to re-orient the economy towards free market in where the financial and intermediary role of banks becomes more crucial to the economy.

The practical application of the deregulation policy has been focused on:
i. Institutional deregulation.
ii. Interest rate deregulation.
iii. Price and trade deregulation.
Deregulatory policy was a child birth of structural adjustment programme introduce in July 1986.
Before the inception of deregulation, the interest rate was highly regulated and there were frequent adjustment of interest rate which was aimed at achieving the monetary objective of the period. With the introduction of the deregulatory policy the interests late have been gradually deregulated.
On 1s October 1987 all controls on interest rating were removed in line with the prophesies on the deregulation of the economy. Deregulation of interest rate makes the allocation of credit by price possible.
Institution deregulation saw the period of discontinued government interference in the various institutions. For example the deregulation of the oil industry gave market the Freedom to import and determine the prices of products without NNPC assistance. This police was equally applicable to the different institutions that make up the economy.

Given this positive development and need to realism interest rate determination with the policy of financial deregulation, the cap on interest rate which had been imposed since 1994 was removed effectively in October 1st 1996. A dynamic market base interest rate policy is now pursued, with effective rates reflecting the forces of supply and demand for funds.


THE ROLE OF CENTRAL BANK IN THE DEREGULATION OF THE ECONOMY
The central Bank of Nigeria is the utmost regulatory body of the financial system. It’s has the responsibility for festering monetary stability and soundness in the system. There are various instruments employed by the central bank of Nigeria for promoting macro-economic stability and a sound financial system. The role of Central Bank of Nigeria (CBN) in the deregulation of the economy included the deigns and implementation of exchange rate policy, external debt management and domestic monetary whey reforms. The Central Bank also offer advise to government in areas such as fiscal policies, external trade and other public sector policies which are considered below.
a. MONETARY POLICY MEASURES
In line with the general philosophy of deregulation Central Bank of Nigeria has pursued monetary policy measure aimed at inducing the emergence of market oriented financial system for effective mobilization of financial savings and efficient resources allocation.

The system of regulatory measures constructed to protect investors and to maintain confidence in the stability of financial market and institutions failed to achieve the set objectives as financial institutions devised other means of operation other than their compliance to the regulatory body controls.

Also the regulations had allowed the banks to emerge as highly profitable institution but with a deeming market share and at a high cost to depositors. Several development also rendered the impact of regulations of financial institutions a weak tool. One of such development is the up surge of and increased variability in inflation. Inflation has the potentials of increasing the opportunity cost of holding money balanced investors tend to prefer short dated claims over longer dated clams. Maturity controls imposed on the banks restricted their ability to meet this demand.

The limited (Flexibility) of banks in the face of high and variable inflation rates afford an opportunity for non-bank financial intermediaries to expand consequently, money market corporation, building societies and credit unions, experienced rapid growth. Other development is the progressive increase in the size of government budget deficits. The effect of this rapid growth places considerable pressure on existing methods for the sale of public securities.
In the high of the analysis, monetary authorities may switch to financial deregulation to set in motion changes in both the manner in which monetary which is transmuted to the real economy and the stability and interest rate elasticity of the demand for money. This, the introduction of a tender system of selling government securities and the more to a floating exchange rate regime imprecating the monetary authority potential control over injections of liquidity into the domestic monetary system thus, enhancing their ability t use open market operation to influence domestic monetary condition.

Consequently, monetary policy in a deregulated financial system, strengthens the role of markets forces is determining operations strengthen the real economy though changes in interest rates, with greater competition therefore, financial sector, changes in interest rates, tend to spread quickly through the whole range of financial assets and liabilities. Specifically, in the deregulated. Financial environment, the value of deposits is determined by both demand and supply consequently, any tightening of monetary policy by the monetary authority will induce a rise in deposit and of setting to some extent the authorities effort to reduce the growth of money. This, financial institution particularly banks are now setter to protect their deposit base and to sustain their larding them they had been in the regulated framework in which the volume of deposit was primarily demand determined.

The demand for credit may also have become less sensitive to interest rate in the deregulated system. For example, increased use of floating interest rates and moral suasion and flexible loan packages may have resulted in less discouragement to marginal borrowers rates rise.
b. FOREIGN EXCHANGE MARKET (FEM)
The inception of deregulation saw the introduction of the second-tier foreign exchange market by the Central Bank of Nigeria which was aimed at achieving a more rational determination of naira exchange rate and consequently a more efficient allocation of foreign exchange reserves. The second foreign exchange market was merged with the first tier foreign exchange market to reinforce the market determination.

In addition to the above role of the CBN in the formulation and implantation of monetary and banking policies. It also plays active advisory role to the government in the formulation of policies on external trade, as well as fiscal and other policies.
2.6 EFFECT OF DEREGULATION OF THER ECONOMY ON NIGERIA COMMERCIAL BANKS
The deregulation policy brought about by the structural adjustment programme initiated by the Barbagida administration in 1986 affected the Banking Industry more than any other sector of the economy. It changed not only the structure but also the content of banking business.

The institutional deregulation of the banking industry resulted in the establishment of many new banks. The number of operating banks almost doubled within three years in the reform and tripled in the fifth years. The number of banks grew tremendously from forty in 1985 to one hundred and fifty five in 1991 and decline to ninety in 2004. The decline was due to the fact that the may power resources base available to the industry has not been developed at a sufficient rate to match the growth in the banking industry.
The growth of banks appear to have had only a marginal impact on the concentration of industry. The share of the three biggest bank in the total assets of the industry decreased from 37.3 before deregulation to 34.61. on average after the deregulation period, a reduction of only 2.7.5 points despite the over 2growth of operating institution. The new banks were generally small and undercapitalized, a situation that later led to an ward review of banks minimum operating capital which is at tone of 25 billion at present.

The up surge in the number of bank operating in the economy made the banking environment very competitive and banks became more committed of efficiency and customer satisfaction. The policies brought to an end the banking system been describe as the “ armchair banking”

Banks being faced with such competitive environment now devote time to study the price and now price need of their customers and design various product that meet such needs prominent among the changes that affected commercial Banks are:
i. Increase in the number of banks which led to decrease in the individual bank market share. There by resulting in increase competition.
ii. Introduction of tight monetary policy which gave rise to sauces in the economy.
iii. Deregulation of interest rate which gave bank freedom to change different commercial rates for different customers resenting in banks extending very risky interest rates to customers.
v. Removal of ceiling rate for maximum lending which provided room of banks to adopt various measures geared towards maximizing their earning there by making banks to determine their own lending rate along a price discriminating route.
vi. Increase in banking license which brought with it technology break through, Average customer which were seen as begging for service were now being regarded as “king”. The customer is at liberty to choose any bank that meets up with level of satisfaction he wants.
viii. Insufficient growth in manpower resource to meet up with the growth in the banking industry as well as their activities. Consequent upon the introduction of the information technology, the old generation banks had no option than to upgrade the skill acquisition of their banks staff to fall in line with the new order.

The resulted in down- sizing and night-sizing of staff, in most cases through retrenchment and retirement of staff, with a view of hijacking the organization with fresh graduates. This equally means that the minimum ending requirement changed from secondary school certificate to first degree and its acquirement.
viii. Increase is the volume of foreign transaction New Commercial Bank came with great information technology which made it possible for transactions to be made cross the glo between split seconds what Western union money transfer, money gram etc..
ix. Removal of distinction between thereby increasing the activity range of commercial Bank. For example introduction of specialized area of banking such as merchant Banking, Agricultural banking etc. The above listed effects does not give an exhaustive list of the effects.
The above changes have been describe as a revolution whilst others see them as another banking boom. The volume of profit increased substantially with the deregulations of the economy. Although it was not by chance.
2.7 CHALLENGES AND ACHIEVEMENT OF COMMERCIAL BANK UNDER A DEREGULATED ECONOMY
The deregulation of the Nigeria economy poses some challenges to the banking industry. Bank were threatened by the increased completion occasioned by increase in the number of bank and non banking financial institution as we as challenges to meet up with the innovation of variety of activities associated with the growth in the banking industry. Most of the challenges that threatens the activities of commercial banks are instead below.
i. Ability to cope with high demand for bank loans with competitive lending rate.
ii. Ability to effectively mange credit risk.
iii. The level of expertise in investment banking and corporate financing activities.
iv. Ability to meet the price and non- pricing needs of the banking public.
v. Ability to research daily to meet with the ever changing demand of the economy.
The Nigeria Commercial Bank responded to these challenges with a combination of money market and customer related activities could include provision of more services or the provision of incentives to attract customers. Money market and customer related activities customer related activities involve the control of management of money market instrument to create additional liquidity. It could also involve the massive discount of government bills, conversion of cases money into call or introduction of new instrument specifically targeted to go a sector of the economy where fund can still obtained at the right price.

Just all the bank experience many challenges they equally made some achievement. In the first few tear of the deregulation the share of the banking system credit to the private sector improved and superseded the flow of government for the first time in fire years. Achievements of Commercial Bank could be measured in terms of efficiency with which banks personnel development.

The efficiency with which banks carry out their activities were improved tremendously, since customers were forced by the competitive environment to be more sophisticated and discriminating in the choice of facilities and activities offered by commercial banks.

The demarcation between commercial bank and other banks were remove therefore expanding he activities offered by commercial Banks.

Commercial bank also achieved increase profitability as well as increased turnover. Due to the expansion in the activities of commercial banks about by deregulation commercial banks now undertake or carry activities that were not formally under their jurisdiction services such as Merchant Bank, Agricultural Banking, Investment Financing, Advisory services, long term provision of fund, for project financing. All this went towards increasing the banks turnover as well as it profitability base.

There were need for commercial bank to develop their manpower resource base in order to match the innovation and wide range of activities being carried out by commercial banks. With the development of manpower base of commercial banks, bank were able to perform efficient functions gimed towards increasing the size of domestic savings channeled through the formal financial sector; improve the efficiency of financial intermediation and enhance the effectiveness of monetary policy.
2.8 A COMPARATIVE ANALYSIS OF COMMERCIAL BANKING IN AN ENVIRONMENT OF REGULATION AND DEREGULATION

The comparative analysis well be made under two subheadings.
a. Commercial banking under regulatory environment
b. Commercial banking under an environment of deregulation.
a. COMMERCIAL BANKING UNDER REGULATORY ENVIRONMENT
Commercial banking system under this environment wee guided by strict monetary and Bank policies, which controlled their lending capacity, liquidity and reserve ratios, monetary and banking policy measured are designed to provide an environment which is conducive to the achievement of both macro-economic stability and growth as in other countries with the responsibility for the design and implementation of monetary and banking policies as well as the regulation and supervision of the nations monetary and banking system. This function is however carried out in collocation with key agencies of the Federal Government.

There was equally a distinction blow the activities provided by commercial banks and other types of bank such as merchant bank, development bank etc. commercial banks were prohibited from engaging in trade or owning real estate except where strictly necessary a proportion of their profit were required to be transferred to reserves (25.1)

There were consistent review of their paid up capital to meet with the changing requirements of the economy. In other to make the operation of banks more relevant to the needs of the policy making machinery of the system, the central bank of Nigeria in collaboration with the Federal Government required that all banks (Commercial Banks) be locally incorporated.

It should equally be noted that under the regulatory environment the number of commercial banks in existence were very few.

There were no competition among the existing among ones. Due to the lack of competition inherent in their activities they develop a Luke warm attitude towards their operation thereby leading to inefficient allocation of their resources to non productive sector of the economy.

An average customer were seen as begging for services. Innovation were absent during the period of research daily for pricing and non- pricing needs of their customers since customers were not provided with much choices.
Although the era did not call for much innovation, efficiency and manpower base development, it however curtailed the at which commercial banks 90 distressed. This was due to the fact that Central Bank of Nigeria in collaboration with Federal Government provided policies as well as different bodies to monitor the activities of commercial banks from time to time.

To monitor banks, compliance with the guideline the CBN takes the following measures;
1. Analysis of regular and occasional returns from banks.
2. Conduct of periodic, target and special examination I investigation of the book of the licensed banks.

On the basis of the findings the CBN decides whether to apply penalties on defaulting banks or to deprive them of some privilege. Furthermore, the effects of the policy measures on the movement in money stock, and the health of the banks are often reviewed while the over all impact of policy on the economy is appraised. This appraised assists the CBN to determine whether to continue with the exiting measures or to imitate a review of the policy package either to change the direction or to fine- tune existing policies.
b. COMMERCIAL BANKING UNDER DEREGULATED ECONOMY
This period witnessed increased number of banks among commercial bank. With the introduction of deregulatory policy the number of banks increased, it doubled within three years of it introduction which look place in July 1987 and triple in the fifth year. It required the re-imposition of embargo on bank licensing in 1991 to half his growth. At present the number of commercial banks operating in Nigeria is about 90 in number.
With the introduction of the deregulation policy it appeared that the events of free banking eva were replaying themselves. The favouable environment provide by deregulation led to increased interest rates and crumble for license to establish new banks. The increase in number of banks resulted industry. To survives within this period, banks resorted to various marketing strategies to out do each other, attract more customers and sustain the confidence of the existing customers.

However, in an attempt to remain afloat, many banks over did many things (Including) up front interest payment, high interest rates on deposit accounts, over expansion and declaration of paper profit. The period is jenny characterized by the following.
1. Increase in number of banks.
2. Introduction of various new banking products to attract and retain customers.
3. The advent of Saturday and mobile banking in Nigeria.
4. The introduction of up front payment in interest rates.
5. Prominence given to marketing strategies in marketing banking products.
6. High staff turnover within the banking system because of attractive salaries and benefits being offered to attract experience personnel.
7. Poaching of qualified and experienced staff from one another.

CHAPTER THREE
3.0 RESEARCH METHODOLOGY
This chapter shows the research methodology, procedure techniques, and instrument used in data collection.

The research methodology adopted will be aimed at deterring the financial performance which will be measured by the study of the profitability, solvency, financial strength and turnover of commercial banks under a deregulated system of economy. It also deal with the various means through which data were collected at well the technique of data analysis.
3.1 RESEARCH DESIGN
There were two types of questionnaire being administered. The first set were designed and administered among staff of commercial banks, while the second set were designed and administered among, users of commercial banking services. Thirty questionnaires were administered to staff of first bank Nigeria Plc Owerri Branch while twenty were administered to twenty selected uses of commercial Bank.

In other to obtain more complete picture of the research questions and answer, interviews were conducted with top management staff of first Bank Nigeria Plc. The interviews were not structured, that is questions were asked depending on the circumstance and need. The interview was aimed at supplementing and clarifying information supplied by the questionnaire.

3.2 SAMPLE SIZE
The simple was all commercial bank in Nigeria. Since it is not possible to risk all Commercial Bank in the country, and also due to contain constraints the simple size was limited to first Bank Nigeria Plc, Owerri Branch. And twenty selected users of commercial Banks. The factor and economics constraint and on the premise that economies deregulation is a phenomenon that effects the activities of all commercial Banks irrespective of the type or name. The sample size for this research is made up of 50 respondents consisting of thirty staff of first bank a Nigeria Plc and thirty selected users of commercial bank.
3.3 SOURCES OF DATA
Data collected for the research were from both primary and secondary source.
i. Primary source: This are data from original source, that is to say that data is being collected by the user. In this case the primary source of data for this research is the questionnaire and oral interview conducted with staff of first Bank Plc as we as the banking public.
ii. Secondary sources: This involve publications which relevant information relating to this study are contained. This include, test books journals, publications seminar papers newspapers bank annual report encyclopedia etc.
3.4 DATA COLLECTION METHOD
Through simple random sampling, a total fifty questionnaire were administered. Thirty to staff of first Bank Nigeria Plc Owerri Branch. Twenty to selected users of commercial Banks (customer). The questionnaire were issued by hand and collected the following day be the researcher. However five questionnaire were not returned.

The researcher also made of different libraries within and outside Imo state visited include Nnamdi Azikiwe University Library, Anambra state library, Imo state Library Owerri, Imo state University library and Federal Polytechnic Nekede library
Interviews were also conducted with staff of other commercial banks apart from first bank of Nigeria Plc. The interviews were mainly with management staff. The interviews were aimed at confirming the consistency of result obtained from the questionnaire administered.
3.5 TECHNIQUE OF DATA ANALYSIS
The data collected and presented were analyzed and tested for validity. The technique of data analysis and test used to measure the consistency of the test used in this research was the (chi0squared of the result as supplied by data.

Chi-square analysis is used to measure the discrepancy frequency as supplied by statistic and it is represented by
X2 = ∑ Oi-Ei
Ei
Where x2 = chi square

Ei = Expected frequency
Oi = Observed frequency
∑ = Summation sign
Ei = Row total x column total
Grand Total (For martrix Number)

Ei = ∑Oi
n(for non metrix number)
The null and alternation hypothesis with be used in the analysis. Nll hypothesis represented. H0 and the alternative represented by Hi. AW null hypothesis will be rejected while the alternative hypothesis will be accepted if the calculated value is greater than the tabulated value.

CHAPTER FOUR
3.0 DATA PRESENTATION AND ANALYSIS
In this chapter we shall analyze and interpret the data collected during the research. Analysis of data involves the breaking down and arranging of data into meaningful groups. Together with the searching for pattern of relationship among those data groups.

When data is analyzed, it provide information necessary for decision making purpose. Analysis of data equally helps to determine the earning performance, the soundness and liquidity position of a financial institution. Interpretation of data may be regarded as the chose examination of financial statement designed to reveal the strength and weakness of the reporting enterprise and the factors accountable for them. This normally entails the drawing of inference and conclusion for analyze data.
4.1 DATA PRESENTATION
Data presentation deals with the presentation of data collected. It deals with the presentation of results obtained from questionnaires. The tables and groups presented below are based on the research questions administered through questionnaire.
TABLE 1
Table 1 shows the total number of questionnaire administered it shows the number administered to the staff of fist bank Plc and the number administered to selected number of banking public.
Option Total questionnaire administered No Returned No Not Returned
Bank staff 30 29 1
Banking public 20 16 4
Total 50 45 5

QUESTION 1
The deregulation of the economy respected in an upsurge in the number of banks in Nigeria
TABLE 2
Option Banking state Banking public Percentage(1)
Agree 25 9 75.6%
Undecided 1 4 11.1%
Disagree 3 3 13.3%
Total 29 16`100%
Key
y







X
A B C




From table 2 and the bar chart above, out of first five respondent, 34 (75.6%) agree that the deregulation of the economy resulted in an upsurge in the number of number of banks in Nigeria. Five or (11.1%) were undecided while (6) or (13.3% were undecided while (13.1%) disagree.
QUESTION 2
The financial performance of banks have improved tremendously following the deregulation of the economy.

TABLE 3
NO OF RESPONDENT = 45
Option Banking Staff Banking public Percentage(%
Agree 22 12 75.6
Undecided 4 2 13.3
Disagree 3 2 11.1
Total 29 16 100%





















A B C X



From table 2 and its bar chart it could be seen that 75.6% agree that financial performance of banks have improved tremendously following the deregulation of the economy. 13.3% were undecided while 11.1% disagreed.
QUESTION 3
TABLE 4

NO OF RESPONDENT = 45
Option Banking staff Banking public Percentage (%)
Agree 15 8 57.1%
Disagree 14 8 48.9%
Total 29 16 100%














From the figure above it could be seen that 51.1% agree to the fact that deregulation of the economy has led to a sharp increase in banks forgeries, fraud and embezzlement which 48.9% disagree.
QUESTION 4
The mopping up of excess liquidity in the economy by the central bank of Nigerian adversely affected the financial performance of commercial bank.
TABLE 5
NO OF RESPONSES = 45
Option Banking staff Banking public Percentage(%)
Agree 20 12 71.1%
Disagree 90 4 28.9%
Total 29 16 100%










71.1% 28.9% X



From the table it could been seen that 32(71.1%) agree to the fact that mopping up of excess liquidity in the economy by Central Bank of Nigeria (CBN) adversely affected the financial performance of commercial Banks while 28.9% were against the view.
QUESTION 5
Deregulation of the economy leads to a sharp increase in banks bad and doubtful debt.



TABLE 6
NO OF RESPONSE = 45
Response Banking staff Banking public Percentage (%)
Agree 19 7 57.8%
Undecided 4 6 22.2%
Disagree 6 3 20%
Total 29 16 100%


A
B
C






A B

C X
57.8% 22.3% 20.%

From the chart above 26 (57.8) agree to the fact that deregulation of the economy has led to a sharp increase in bank bad and doubtful debt while 10(22.2%) were undecided a disagreed with the fact.
QUESTION 6
The deregulation of interest rate by central bank of Nigeria (CBN) resulted in the efficient allocation of commercial bank resources.
TABLE 7
Option Banking staff Banking public Percentage(%)
Agree 10 8 40%
Disagree 19 8 60
Total 29 16 100%b




A B
40.% 60%

Form the chart above it could be seen that 40% agree with the fact that deregulation of interest rate by central bank of Nigeria (CBN) resulted in efficient allocation of commercial bank funds, while 60% disagree with the view.
QUESTION 7
The banking industry has become more profitable since deregulation of the economy.

TABLE 8
Option Banking staff Banking public Percentage(%)
Agree 20 10 66.1%
Disagree 9 6 33.3%
Total 29 16 100%




According to the table above 20(06.7%) were of the view that banking industry have become more profitable since the deregulation of the economy, while is (33.3%) were against the view.
QUESTION 8
The tight competitive environment of banking industry leads to more efficiency in rending banking services.
TABLE 9
NO OF RESPONSES
Option Banking staff Banking public Percentage(%)
Agree 27 9 80%
Disagree 2 7 20%
Total 29 16 100%

From the table above 36(80%) of the respondent are of the view that the tight competitive environment of the banking industry has increase efficiency in rendering banking service, which 920% disagree with the view.
QUESTION 9
The deregulation of the economy resulted tremendously in an increase in manpower development in the banking industry.





TABLE 10
NO OF RESPONDENT = 45
Option Banking staff Banking public Percentage(%)
Agree 22 15 82.2%
Disagree 7 1 17.8%
Total 29 16 100%

From the table above 37(82.2%) believe that there has been an increase in manpower development in the banking industry following the deregulation of the economy, while 8 (17.8%) disagree with the view.
QUESTION 11
Do you think that the various deregulatory measures taken by the central bank of Nigeria 9CBN) achieved the desired objectives.
TABLE 12
NO OF RESPONSES = 45
Option Banking staff Banking public Percentage(%)
Yes 10 10 44.4%
No 19 6 55.6%
Total 29 16 100%




A B




4.4.4% 55.6%
From the bar chart above it could be seen that 20(44% agree with the fact that the deregulatory measures by Central Bank of Nigeria (CBN) achieved the desired objective while 25(55.6.%) disagree with the fact that it achieved the desired objectives.
QESTION 12
Do you think that the deregulation of the economy leads to increase in product development?



TABLE 13
NO OF RESPONDENTS = 45
Option Banking staff Banking public Percentage (%)
Yes 27 15 93.3%
NO 2 1 6.7%
Total 29 16 100%

From the table above 42 (93.3%) were of the view that the deregulation of the economy leads to increase in product development while 3(6.7) disagree with the view.
QUESTION 13
Do you think the establishment of National Deposit insurance corporation (NDIC) has increase the confidence of the banking public in Nigeria commercial bank.
TABLE 14
NO OF RESPONDENTS = 45
Option Banking staff Banking public Percentage(%)
Yes 14 7 46.7%
No 15 6 53.3%
Total 29 16 100%
From the table above 2146.7% agree to the fact that the establishment National Deposit insurance corporation (NDIC) has led to increase in the confidence of the banking industry in Nigeria commercial banks while 24 (53.3%) disagree with such view.
QUESTION 14
Do you think that development manpower resource base by commercial bank increased the number of professional in the banking in the banking industry.
TABLE 15
NO OF RESPONDENTS = 45
Option Banking staff Banking public Percentage(%)
Yes 16 8 53.3%
No 13 8 46.7%
Total 29 16 100%

From the table 24 (53.3%) agree while 21(46.7%) disagree.
QUESTION 15
Do you think the deregulations of interest rate encouraged you to use commercial banking services more often.
TABLE 16
NO OF RESPONDENT = 45
Option Banking staff Banking public Percentage(%)
Yes 24 12 80%
No 5 4 20%
Total 29 16 100%

From above, it could be seen that 80% of the respondent agree that interest rate deregulation encouraged their use of commercial bank services often, while 20% of the respondent disagree.
4.2 DATA ANALYSIS
The data were analyzed using the percentage net. The response obtained is weighted against the number of responses collected is a fraction of the total response as a percentage and as

Represented mathematically as 1 of response
+ Res*/-RessponX 100
1
4.3 TEST OF HYPOTHESIS
The hypothesis formulated in chapter one will be rested by the means of chi- square chi- square (X2 ) is used to analyze the data. X2 =
∑ oi- Ei)2
Ei

Where X2 =chi- square
0i = Observed frequency
Ei = Expected frequency
∑ = Summation sign
The hypothesis relating to the research topic will tested at 5% significations level.
TEST OF HYPOSTHESIS 1
Ho: The deregulation of the economy does not result in an upsurge in the number of banks in Nigeria.
H1: The deregulation of the economy results in an upsurge the number of banks in Nigeria.
TABULATED VALUE X
Option Banking staff Banking public Percentage(%)
Yes 25 9 75.6%
No 1 4 11.%
Total 29 16 100%

Text at 5.% significance level (D.05) Calculate for the degree of freedom.
DF = (C-1)(R-1)
Where C = Column
R = Row
Df = (3-1) (2-1)
Df = 2x1 = 2
CALCULATED VALUE XCo
Options Oi Ei Oi –Ei (Oi-Ei)2 (0i-Ei)2
Agree 34 15 19 361 24.1
Undecided 5 15 -10 100 6.7
Disagree 6 15 -9 81 5.4
Total 45 45 36.2

Ei = ∑0i = 45 = 15
N 3

Xc (O.05,2) = 5.99  6 (from chi-square distribution table using 5.1 significant level) the tabulated value of 6(Xo) is less than the calculated value 36.2 (Xoc)
DECISION RULE
Reject null hypothesis if the calculated value is grater than the tabulated value.
DECISION
Reject null hypothesis (H0) and accept alternative hypothesis (H1) This implies that the deregulation of the economy results in an upsurge in the number of banks in Nigeria.

Key


5.991
Calculated value Xco = 36.2
Tabulated value (O.05.2) = 5.9916

TEST OF HYPOTHESIS 2
The effect of deregulation on banks profitability H0: The deregulation of the economy does not result in an increase in banks profitability.
TABULATED VALUE X%
Options Banking Banking Total in %
Agree 20 10 66.3%
Disagree 9 6 33.3%
Total 29 16 100%
Test at 5.1 signification level (0.05) Calculate for the degree of freedom.
Df =(C-1) (R÷1)
Where c = Column R = Row
Df = (2-1) (2-1)
Df = 1x1 = 1
CALCULATIVE VALUE Xoc
Options 0i Ei 0i-Ei (0i-Ei)2 (0i-Ei)2
Ei
Agree 30 22.5 7.5 56.26 2.5
Disagree 15 22.5 -75 56.25 2.5
Total 45 45 5.0
E1 = 0i = 45 = 22.45
n 2

Xcn (0.05,1) = 3.841 (From chi-square distribution table) The calculated value of 5(Xoc) is greater than the tabulated value of 3.841 (Xco )
DECISION
Reject null hypothesis (Ho) and accept alternative hypothesis (Hi) This implies that the deregulation of the economy result in an increase in banks profitability.
TEST OF HYPOTHESIS 3
The effect of deregulation on banks bad and doubtful debt.
Hi: Deregulation of the economy leads to a sharp increase in banks bad doubtful debt.
Ho: Deregulation of the economy does not lead to a sharp increase in banks bad and doubtful debt.
TABLULATED VALUES X1o
Option Banking staff Banking public Total in %
Agree 19 7 57.8%
Undecided 4 6 22.2%
Disagree 6 3 20.0%
Total 39 16 100%

Test at 5% (0.05) significance level calculate for the degree freedom.
DF= (C-1) (R-1)
Where C= Column, R – Row
DF= (3-1) (2-1)
DF= 2x1=2

CALCULATED VALUE (x0c)
OPTIONS Oi Ei Oi –Ei Oi-Ei)2 (Oi-Ei)2
Agree 26 15 11 121 8.1
undecided 10 15 -5 25 1.6
Disagree 9 15 -6 36 2.4
Total 45 45 12.1

Ei =  Oi = 45 =15
N 3
X: (0.05,2)= 5.99 from chi-square distribution table). The calculated value of 12.1 (Xcc) u greater than the tabulated value of 5.9991 n 6(x0C)
DECISION
Reject null hypotactic (Ho) and accept alternative hypothesis (Hi) which is to say that deregulation of economy leads to a sharp increase in bank sad and doubtful debt.










CHAPTER FIVE
4.0 SUMMARY CONCLUSION AND RECOMMENDATION
This chapter grievous at summarizing the finding from the research work as well as provided recommendation.

5.1 SUMMARY
This study shows that the adoption of the deregulation policy in Nigeria was in response to the deteriorating economic and social conductions inherent in Nigeria economy among the considered trend were slow output growth, decline exports, rising inflation, inefficient allocation of economics resources, balance of payment problems and rising debt burden. In order to proffer solution to the un-conducive environment the deregulation policy was introduced to combat with the distortions in Nigeria economy.

The deregulation policy encourages the efficient operation of the market which will lead to higher, productivity, greater efficiency and efficient allocation of economic resources.

This study has shown that the macro economic policy environment is an ample evidence that the deregulation has brought about a substantial change in the structure of commercial banks operation through the dismantling of most of the complex regulatory frame work, particularly on the deregulation of interest rate institutional deregulation, price and trade deregulation.
The deregulation policy provided a competitive environment for commercial banks with the proliferation in the number of banks came the end of the era of armchair banking. Banks became more committed to efficiency and customer satisfaction. Faced with the competitive environment banks driven by instinct for survival research daily the customer.
This period also saw the introduction of new products and information technology in the banking industry. This was in accordance to the changing demands of the economy with the introduction of new products and information technology there was need for manpower base development. Bank in response to such need engage in staff skill development in order to increase the efficiency with which their services is been carried out.

Inherent among the effect of deregulatory policy were the introduction of specialized banking such as merchant banking, agricultural banking. With the introduction of the serialized banking the profitability level of commercial banks equally increased. It was also discovered through though the study that deregulation poses some challenges to commercial banks in the form of ability to meet up share holders requirement in respect of their investment, high demand for bank loans with competitive lending rate, ability of the bank to effectively manage credit risk as well as to get the fair share of the banking public with a competitive interest the government in collaboration with Central Bank of Nigeria has directed the economy towards achieving certain macro economic objective through deregulation of interest rates, institutional deregulation as well as trade and exchange deregulation. All there were aim at efficient allocation of economic resources.
5.2 CONCLUSION
From the research carried out in the study of the impact of deregulation on commercial banks activities the following conclusion can be made.
i. The deregulation of the economy resulted in an upsurge in the number of banks resulting in a competitive environment.
ii. The deregulation of the economy resulted in increase in manpower or staff skill development in the banking industry.
iii. With the deregulation of the economy came high technology information technology thereby reducing the incidence of fraud.
iv. The competitive environment created by deregulatory policy led to an increase in product development.
v. Through deregulation policy the efficiency with which banks and other institution carry out their business has been on the increase.
iv. Deregulation of interest rates policy did not contribute to the efficient allocation of economic resources as fund were being directed to non productive sector of the economy.
vii. The financial performance of commercial banks improved tremendously following the deregulation policy.
viii. The policy of deregulation did not actualize the objective for which it was being implemented.

5.3 RECOMMENDATION
Based on the finding of this project, the following recommendation is been made.
1. There should be some consistency in interest rate policy which be favourable enough to ensure greater utilization of banking service towards efficient allocation of the economy resources. That is to say that the interest rate should not be too low to discourage savings or too high to still new investment.
2. The economy should not be totally deregulated. It should be a form of “sitting on the fence” between regulated and deregulated economy.
3. Commercial banks should ensure that adequate collateral are collected before extending loan to customers, irrespective of the competitive environment in order to reduce the incidence of bad and doubtful debt.
4. Since the deregulation measure taken by the central banks have not achieved their designed objectives, there should be a drastic revaluation of the implementation strategies. The central bank of Nigeria should make sure that interest rate changed by commercial banks should be a function of rate payable by Central Bank of Nigeria (CBN) on their commercial papers, like treasury bills, treasury certificate, bonds and guarantee etc.

QUESTIONNAIRE
Your answers to the questions listed below will be treated in strict confidence. It is for academic exercise only. Thanks for you anticipated co-operation in the regard.
INTRODUCTION: Please tick in the box corresponding to your answer as:
Thus
SECTION A
1. NAME (Optional)……………………………………………………………….
2. YOUR SEX MALE FAMALE
3. BANK POSITION MANAGEMENT
SENIOR OFFICER
STOCK BROKER
4. WAT IS PRESENT QUALIFICATION?
WASE/NECO
H.N.D
FIRST DEGREE
POST GRADUATE
OTHERS
5. HOW MANY YEARS OF SERVICE HAVE YOU PUT IN?
LESS THAN ONE YEAR
1.3 YEAR
4.6 YEARS
7.10 YEARS
HAND ABOVE
6. HOW MANY TIMES THAVE YOU ATTENDED TRANING COURSES SINCE YOU WERE ENPLOYED
ONCE
TWICE
FOUR TIMES
NONE
7. WHERE WAS THE TRING DONE?
NIGERIA
OVERSEAS
WITHIN THE ORGANIZATION
SECTION B
8. Do you think the Nigerian capital market through the activities of the Nigerian stock exchange (NSE) has made any significant contribution of the industrial development of Nigeria?

YES
NOT QUITE
NO
NOT AT ALL
UNDERCIDED
9. To what extent has the stock exchange been able to achieve the purpose of mobilizing private savings and investment and chancing?
VERY LARGE EXTENT
LARGE EXTENT
SOME EXTENT
LITTLE EXTENT
NO EXTENT
10. The Nigerian stock exchange (NSE) is a vehicle of Nigeria’s industrial development
STRONGLLY AGREED
AGREED
UNDECIDE
STRONGLY DISAGREED
DISAGREED
11. Which of the following sources can you say account more of the exchange problems in the past?
GOVERNMENT DOMINANCE
LOW PRIVATE SECTOR PARTICIPATION
ALL OF THE ABOVE
NONE OF THE ABOVE
12. DO you think that the initial slow growth of the capital market affected the growth rate of Nigeria industrialization than and presently?
YES
NO
13. Following the openness with which the stock exchange transitions are conducted on the floor of the exchange, apathy is the main reason for investors ignorance of what the capital market is all about.
NO
NOT OUTE
UNDECIDED
YES
14. General properly and literacy is responsibly for the security of private savings and investment in Nigeria.
YES
NO
15. Do you think enough securities are traded on the floor of the exchange
YES
NO
16. Would you suggest the injection of more securities in the Nigerian capital market?
YES
NO
17. How would you describe the price of securities of companies using the exchange for their finance?
HIGH
MODE RATE
LOW
VERY LOW
18. How can you describe the facilities and operational procedures and operational facilities of the Nigeria stock exchange?
FRIELY GOOD AND MODERN
VERY POOR AND MODERN
VERY POOR AND OUIDATED
POOR AND SLIGHLY MODERN
19. Is there way government policies affect the operations of the Nigerian stock exchange?
YES
NO