Financial system, Financial sector stability, Macroeconomic policies, Structural policies


The financial system plays an important role in the process of economic growth and development of a country. A financial system consists of various institutions, markets, instruments and operators that interact within an economy to provide financial services. It plays the crucial roles of lubricating the payment mechanism, resource mobilisation and credit allocation. The Nigerian financial sector comprises the regulatory/supervisory authorities, deposit money banks, and other nonbank financial institutions. The objective of this paper is to examine the effect of macroeconomic/ structural policies on the financial sector, as well as the challenges of maintaining financial sector stability in Nigeria. The paper reviews the various sectoral policies that have been implemented in the Nigerian economy since the 1990s. Specifically, the paper examines how these policies have contributed to financial sector stability as well as the inherent challenges. The study concludes that, CBN has taken proactive steps to strengthen the financial sector through various regulatory, prudential and contingency measures, aimed at ensuring the soundness and stability of the sector. ln this regard, the Bank has designed measures to enhance the capital base of banks and promote professionalism in the financial services industry. lt also encouraged the adoption of international best practices, including the new Basle capital accord and uniform accounting standards. The need to further strengthen the regulatory and supervisory framework of the CBN became more compelling with the adoption of universal banking in 2001.

Author Bio

The author is a staff of the Central Bank of Nigeria.

Publication Title

CBN Bullion






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