BANK REGULATORY INSTRUMENTS ANDPERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA
Abstract
The study was conducted to examine the effect of regulatory instruments (cash reserve ratio, loan provision ratio and bank rate) on bank performance of commercial banks in Nigeria. To this end, the research has considered all commercial banks in captured in the CBN bulletin over the sampled period. The study used secondary sources of data collected from CBN Bulletin over the period 2006-2015. Regression analysis was used to analyze the data and the variables showed a significant relationship between Bank regulatory tools and bank Performance. The finding of this study shows that regulatory instruments have an insignificant effect on Bank Performance. The instruments are usually persuasive as a result most banks will blatantly flaws the regulations and prefer to pay penalty if the returns from the violations of the regulatory instrument is higher than the penalty. Based on the result of the analysis the study recommends that the regulatory body should be strict on the enforcement of regulatory instrument rather than the persuasion and moral suasion that allows the DMBs to twist rates that have been set by the regulation.
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