Banking Sector Liberalisation and the Impact on Local Economy: The Nigerian Experience

The paper investigated banking sector liberalisation and the impact on local economy: the Nigerian experience. Financial Liberalization is the process of reducing legal controls on capital movements in and out of a country. Liberalisation of the financial sector involves removing restrictions and regulatory controls over financial institutions, thereby allowing key instruments, such as interest rates and credit distribution, to be determined by the market. Foreign investors access to domestic assets and markets, reflected in capital inflows. Domestic borrowers and investors being able to use international financial markets to borrow and save, reflected in capital outflows, different from Financial Integration, which is the actual increase in capital movement. Liberalization is a pre-condition for integration, financial liberalization includes different types of flows - Banking - Portfolio (equity and bonds, sovereign and corporate) - Foreign direct investment or FDI (Greenfield and acquisitions). Liberalization can lead to various benefits, including increased economic growth, improved efficiency, access to new markets, and greater consumer choice. However, it can also pose challenges like income inequality, job displacement, and vulnerability to economic crises.