Project – THE ROLES OF BANKING SECTOR IN THE DEVELOPMENT OF NIGERIA ECONOMY
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The banking sector plays a pivotal role in the economic development of Nigeria by facilitating financial intermediation, which is crucial for the efficient allocation of resources within the economy. As a key player in the mobilization of savings, banks provide a channel for both domestic and foreign investments. According to Akinlo and Adejumo (2019), banks in Nigeria act as intermediaries between savers and borrowers, allowing businesses to access capital for expansion and individuals to obtain credit for consumption. The banking system also promotes economic growth by providing loans to critical sectors such as agriculture, manufacturing, and infrastructure, thereby fostering industrialization and job creation. Furthermore, banks contribute to financial inclusion by extending services to underserved and rural areas, thus integrating a larger portion of the population into the formal financial system (Okoye & Ezeani, 2021).
In addition to their role in financial intermediation, banks in Nigeria are instrumental in enhancing the overall stability and resilience of the economy. They do so through effective monetary policy transmission and by offering a platform for the government to raise funds for development projects. The Central Bank of Nigeria (CBN) has consistently used the banking sector to implement policies that regulate inflation, stabilize the exchange rate, and manage national debt (Ogunleye & Adekoya, 2020). Despite challenges such as non-performing loans and financial instability, the Nigerian banking sector has shown adaptability by adopting digital banking technologies and expanding financial services, thereby improving access and efficiency. This continued evolution of the banking industry reflects its essential role in driving Nigeria’s economic development, creating employment, and improving the standard of living for many Nigerians (Aluko & Ajayi, 2021).
Project – THE ROLES OF BANKING SECTOR IN THE DEVELOPMENT OF NIGERIA ECONOMY
