Managing the Global Economic Meltdown in a Consolidated Banking Sector of Nigeria

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Current Research Journal of Economic Theory 2(1): 16-21, 2010 ISSN: 2042-485X © M axwell Scientific Organization, 2009 Submitted Date: December 09, 2009 Accepted Date: December 28, 2009

Published Date: January 30, 2010

Managing the Global Economic Meltdown in a Consolidated Banking Sector of Nigeria: Rhetorics or Realities J. David Agaba and M.S. Tenuche Department of Political Science Kogi State University, Anyigba Abstract: This paper interrogates the implications of the global economic meltdown on the Nigeria Economy within the framework of a consolidated Banking sector. It investigates the ability of the Nigerian financial sector to withstand the challenges of the global economic meltdown in the face of the current crisis facing the banking sector. W e argu ed in this paper that the financial melt down though a reality in the country's financial sector, has limited impact on the economy because Nigeria’s economy had been heavily weighed down by internal crisis. W e how ever, argued nonethe less that because the glob al econom ic meltdow n coin cided with the age of globa lization that emphasis interconnectedness and b reakin g down of all ma rket barriers, Nigeria cannot be an exception to its deva stating effects since globalization in the first instanc e is not a friend to developing economies like ours. Key w ords: Banking sector conso lidation, central bank of Nigeria, ec onomic development, economic meltdown and globalization INTRODUCTION Broadly defined, a recession is a downturn in a nation's economic activity. The consequence s typica lly include increased unem ployment, decreased consumer and business spending, and declining stock prices. According to Og unley e (200 9), recessions are typ ically shorter than the periods of economic expansion that they follow, but they can be quite severe eve n if brief. Reco very is slower for some recessions than from others. The global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collap sed or been bought ou t, and governm ents in even the wealthiest nations have had to come up with rescue pack ages to bail out their financial systems. Many blame the greed on the W all Street for causing the problem in the first place becau se it is in the US that the most influential banks, institutions and ideologies that pushed for the policies that caused the problems are found. For the developing world, the rises in food prices as well as the knock-on effects from the financial instability and uncertainty in the u nindu strialized nations which were first witnessed in the late 70’s and through the 80’s are having a comp ounding e ffect. Former Governor of the Cen tral bank of N igeria Soludo (2009) on the 18 th of March, at a special briefing of the Federal Executive Council said “resource flows and capital flows around the world are frozen up. Nige ria depends for more than 95 percent of its foreign exchange on oil and the price has crashed to the extent that from about July last year (2008) the outflow of foreign exchange has actually far outstripped the inflows. He said in 2008 Nigeria sold about a billion d ollars a m onth to the bureaux de change but early this year the inflow has been about $80 0 million a month”(S oludo , 2008 ). The ICAN president in Appiah-Dolphyne, (2009) at a seminar also addressed the loss of N9 trillion clipped off from investors in the nations capital market. Also the national coordinator of Independent Sha reholders Association of Nigeria (ISAN ) Mr. Sunny N wosu in Ogundipe, (2009) explained that while some other nations have well spelt out recovery plans, Nigeria has been virtually inactive in taking visible revival steps to bring the economy out of the woods. Executive Secretary of Nigerian Automobile M anufacturers association M r. Arthur Madueke in Obi (2009) lamented that the productive sector which...
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