Assessment of growth in the banking industry and economic development of Nigeria

The study examined the contribution of FDI in the banking industry of Nigeria to the development of the economy. Data for the study were collected for the period 1997 – 2006 from the Central Bank of Nigeria (CBN), the Ministry of Statistics and other relevant periodicals which are used for the analysis. The findings of the study showed significant contribution of the foreign investments in the banking sector to the GDP of the country. However the literature reviewed that the influx of FDI in Nigeria is as result of the good economic climate, government incentives and the stable political atmosphere. We found that the FDI in the banking industry has stimulated keen competition in among domestic banks. Capital inflow has increased in the wake of the merger and acquisitions that swept across the sector. The findings also revealed a drop in number of employment following the mergers in the bank. The study recommends that caution should be exercised to ensure that any bank acquisitions by foreign investors do not involve the control of the main stream banks in the country. Foreign investors should be encouraged to acquire community and other rural banks to help develop and establish the banking system in the rural areas and communities.