EMPIRICAL ANALYSIS OF THE EFFECT OF FINANCIAL POLICY REFORMS ON INNOVATIONS IN NIGERIA'S BANKING SECTOR

Prior to financial reforms in Nigeria, restrictive financial policies, especially low interest rates, high reserve requirements, restricted entry of financial institutions and pervasive intervention in the allocation of financial savings constrained innovations by financial institutions. In this paper, the empirical analysis undertaken showed that after financial reforms, enhanced competition and rates of return on financial instruments contribut ed to increase innovation in the banking sector. Therefore, the conclusion from this analysis is that the current reforms of the financial sector should be sustained to en hance the performance of financial institutions, especially with respect to financial in novation.