Department of Banking and Finance, Olabisi Onabanjo University, Ago-Iwoye, Ogun State Nigeria P. O. Box 6241, Shomolu, Lagos, Nigeria; Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State Nigeria P. O. Box 1166, Ijebu-Ode, Ogun Stat
Okezie, A.C., Department of Banking and Finance, Olabisi Onabanjo University, Ago-Iwoye, Ogun State Nigeria P. O. Box 6241, Shomolu, Lagos, Nigeria; Tella, S., Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun State Nigeria P. O. Box 1166, Ijebu-Ode, Ogun State, Nigeria; Akingunola, R., Department of Banking and Finance, Olabisi Onabanjo University, Ago-Iwoye, P.M.B 2002, Ago-Iwoye, Ogun State, Nigeria
The study set out to find the relationship between commercial banks' regulation and their performance, using the period 1986 - 2004. Granger Causality test, OLS regression analysis and charting, were applied to regulation, measured by the quotient of the number of banks and the number of on-site examination and performance measured by the reciprocal of the number of distressed banks. For the entire period 1986 - 2004, there was no relationship between banks' performance and regulation. However, for both the periods, 1986-1995 and 1996-2004, the level of banks' performance determined the level of regulation, implying that banking supervision policy was reactive rather than proactive. The study, therefore, endorses the move to shift from the transaction bank supervision method to the risk based approach. © EuroJournals, Inc. 2011.