EVOLVING FRONTIERS: THE ROLE OF THE CENTRAL BANK IN NIGERIA'S QUEST FOR DEVELOPMENT

Abstract

The banking sector has a major role to play in all economies the world over more so as its policies and performance have significant impact on economic growth and development. As a component of the formal sector within the Nigerian financial system, the role of commercial banks begins with the acceptance of deposits which, as their primary function, enables the mobilization of savings and the mopping up of surplus funds from circulation. The capital generated from deposits can thus, be given out as loans and advances for investment in areas like manufacturing and agriculture which promotes entrepreneurship. Banks also finance government projects, provide investment advice and portfolio management for customers as well as the execution of monetary policies. They facilitate the exchange of goods and services. All of the aforementioned functions serve to underscore the importance of the Central Bank as the main regulating financial institution over these commercial banks. Although there exists an informal sector of the financial system over which the Central bank has less control, the fact remains that Central Banks are going beyond their traditional role especially in developing counties to enhance development.