Banking Sector Reforms: Post Consolidation Analysis

Abstract

The paper evaluates the banking sector reforms through recapitalization. It examines the rationale and the supposed benefits of the consolidation exercise aimed at improving the productive base of the Nigerian economy. The paper argues that the consolidation has no doubt made people to have more confidence in the Nigerian banking system as depositors can now go to sleep but assured of their money in safe hands as the days of banking distress are gone for good. It further argues that the whole idea of the banking consolidation was not market induced but an advice from the World Bank and the International Monetary Fund. Be that as it may argues the paper, it may become a short-run marriage in the future. The article concludes that consolidation policy is concentrating the wealth of Nigeria to fewer and foreign hands and as such we are moving gradually to the pre-independence era when our banks were largely owned and controlled from abroad.