ABSTRACT

This research project is on "The effect of Financial Liberalization and Interest rate policy on Nigeria Banks", the data used in this project was secondary data. The data were analyzed using tables, while the hypotheses were tested using correlation co-efficient. The major findings of this study are: on the basis of my theoretical and empirical findings, Financial Liberalization in Nigeria has led to bank crisis and significant negative changes in Gross National savings. Also, financial liberalization has led to reduction in the level of Foreign Direct investment (FDI) while having a positive effect on the growth of the Gross Domestic Product (GDP). This indicated that the level of the Gross Domestic Product will increase in line with the implementation of financial liberalization. It however does not make any significant change in inflation. 1-lowever the results obtained indicated that the level of inflation will definitely increase with the implementation of financial liberalization. Consequently, the result indicated a weak relationship in the Level of Banks performance pre Liberalization as measured by the relationship between lending and deposit rates. Although, financial liberalization tends to significantly reduce savings and foreign direct investments in Nigeria, increasing savings may not necessary be the ultimate aim of' the policy. In line with the objective and findings of this study, the following recommendations have been put forth: (i) Liberalization should be combined with adequate prudential guidelines and strong supervision of' banking and capital markets, improved financial intermediation capable of raising the level of other relevant casual factors will be achieved, This scenario will invariably spur the growth of the economy. (ii) Financial Liberalization should not be allowed to function independently in the economy in order to avoid market manipulation and also some other unfavourable opportunities. iii. The government embarking on financial liberalization should set in order a sound capital base, prudential guidelines and a strong regulatory and supervisory agency that will follow up action to ensure compliance.