ABSTRACT
The banking industry in Nigeria came under the sway of market oriented policies in 1987 via the so-called policy of' Financial Deregulation' . A policy
that ushered in a new monetary control regime - an indirect monetary regime. The impact of Deregulation manifested in different forms , some in dramatic fashion . Of great importance was that the policy later triggered shocks that proved devastating for the banking system . There was widespread financial distress which culminated in unprecedented number of bank failures , whose costs to depositors and regulators were estimated in billions of Naira .
What went wrong with Deregulation ? This study examines the impact of the policy on performance of commercial banks using the Model CAMEL (capital,
assets , management ,earnings ,and liabilities). A sample was drawn from the list of licensed commercial banks using a stratified random sampling approach.
Appropriate ratio proxies were employed to examine aspects spelt out in the model. Behavior practices by the different bank size categories were also
examined.
The study reveals that the banking system assumed high credit risk without commensurate returns and consequently accumulated huge non-performing
assets, both profitability and operational efficiency were generally low in the period, but there was a tend towards credit expansion especially as the policy
triggered shocks. On the overall, the huge non-performing loans proved to be the main cause of the widespread distress that plagued the banking sector.
