Finance is the bedrock of an economy and the intermediation function of banks is an essen tial ingredient for rapid economic growth. Thus the financial sector, which comprises a network of financial institutions (bank and non-bank) or agents operating under given rules for rendering or regulating financial services, usually in the form of providing and promoting financial intermediation, is very important for an economy. To ensure effective performance of the intermediation function, elements such as financial institutions, financial resources, financial rules and regulations and financial interactions must be in place. These ele ments and their linkages constitute the financial sector, of which finance and banking constitute an integral part.
Finance and banking, in the Nigerian context, have evolved over the years. The first commercial bank (First Bank of Nigeria PLC) was established in 1892 and the Central Bank of Nigeria (CBN) started operation on July 1, 1959. The sector has evolved and several developments have been made to date. They have been induced largely by a rapidly changing policy environment, technologi cal innovations, market conditions, relationships among financial institutions and instruments, and several laws and regulations of Government. Nigeria has a financial sector comprising the regulatory/supervisory authorities; money market and its institutions; capital market and its institutions; development finance institutions; and others. This module reviews developments in the Nigerian financial sector with particular reference to: (i) The Regulatory Framework and Regulatory/Supervisory Authorities; (ii) Money Market and its Institutions; (iii) Capital Market and its Institutions; (iv) Development Finance Institutions; (v) Other Financial Institutions and (vi) Distress in the Financial Institutions