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Bullion

Keywords

Financial system, GNP, GDP, Interest rate, Financial intermediation, Nigeria.

Abstract

Financial systems all over the world play very important roles in the development and growth of the economy. However, the effectiveness and efficiency of the system as well as its scope and capacity varies quite considerably among economies. This is partly because of the varied levels of ,development. More developed financial systems tend to be associated with the more developed economies. This paper advocates the speedy adoption of international financial reporting standard for all Nigerian banks (currently in the pipeline). This reform, while by no means a cure-all for problems of bank transparency, would nonetheless be a significant step forward, if properly implemented. Apart from benefits of higher quality financial information for potential customers, creditors, and portfolio investors, it would also facilitate more effective banking supervision, and make Nigerian banks more attractive for acquisition by larger domestic and foreign banks. Finally, this paper advocates the speedy adoption of international financial reporting standard for all Nigerian banks (currently in the pipeline). This reform, while by no means a cure-all for problems of bank transparency, would nonetheless be a significant step forward, if properly implemented. Apart from benefits of higher quality financial information for potential customers, creditors, and portfolio investors, it would also facilitate more effective banking supervision, and make Nigerian banks more attractive for acquisition by larger domestic and foreign banks. There is also the need to establish more credit bureaus, to allow for the provision of information on borrowers' credit history, to address the problem of adverse selection and moral hazards, discussed in the literature.

Author Bio

The Authors are staff of the Central Bank of Nigeria and the Nasarawa State University Keffi respectively.

Publication Title

CBN Bullion

Issue

2

Volume

34

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