The Role Of Non Interest Banking In National Economic Development

By  MOBOLAJI, Hakeem Ishola (PhD)

ABSTRACT

This is a preliminary study that attempts to analyze the role of non interest banking (NIB) in national economic development in Nigeria. It uses a theoretical construct and employs a discourse technique for the analysis. The paper suggests that NIB has potentials of enhancing financial inclusion and social capital in the country while reducing the cost of and risk associated with financial transactions. Through its operational modalities, it may also enhance financial depth and breadth and capable of improving financial effectiveness and efficiency which are needed for national economic development. NIB reduces asymmetry and facilitates entrepreneurship and innovation. For the NIB to fully realize its potentials and impact on the economy, some challenges have to be attended to such provision of a well structured regulatory framework on NIB to guide against abuses and ensure uniformity in practices, manpower development, more public enlightenment and standardization of accounting procedures to accommodate NIBs among others. The existence of NIB only put the country among countries with dual banking systems, combining the ethical feature of the NIB and the financial innovation of the conventional banking system, the existence of the two systems would further enhance the potential impact of the financial sector in facilitating economic development as the two systems should be seen as complementary and not substitute.