Nigeria: Why Banks Fail

opinion

Lagos — In the MBA Banking and Finance course I took about three decades ago it was drummed into my ears that banks accomplish three things through the intermediation process: they gather funds from cash-surplus entities; they make credit judgments and assume credit risks; and they assume interest rate risk by using short-term deposits to fund longer term loans - a process known as maturity transformation.

Banks fail when flip-flops are the order of the day in government policies and regulations. They fail when they can't properly adjust to adverse changes in the business environment. A major cause of bank failures is the inability of regulatory and supervisory agencies to effectively perform their statutory duties.

...

AllAfrica publishes around 400 reports a day from more than 100 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.