17 Questions
What is the purpose of deposit insurance?
To protect depositors in case of a bank failure
How is an explicit deposit insurance system different from an implicit one?
Explicit systems are established by legislation, while implicit ones have no formal system
Why is an explicit deposit insurance system preferred over an implicit one?
It clarifies the authorities' obligations to depositors
What does an explicit deposit insurance system clarify compared to an implicit one?
The authorities' obligations to depositors
Which option best describes an implicit deposit insurance system?
No formal system in place
What was the primary goal of the Structural Adjustment Programme (SAP) initiated by the government in 1986?
To reduce distortions caused by previous administrative policies
Why was there an anticipation of increased competition among banks following the liberalization of bank licensing?
To enhance the performance of individual banks and the banking system
What is the main reason for the establishment of an explicit deposit insurance scheme with supervisory powers over insured institutions?
To protect depositors against losses from bank failures
What potential adverse effects on confidence in the banking system did the government fear following a bank failure?
Negative impact on confidence in the economy
Before the establishment of the Corporation, what was the government's approach towards failing banks?
Government propped up inefficient banks to prevent failures
How has the Corporation made it possible for both institutions (CBN and NDIC) to operate concerning licensed banks?
By enabling routine and special examinations of licensed banks
What was one of the factors that led the Federal government of Nigeria to establish the NDIC?
The failure of twenty-one out of twenty-five indigenous banks in Nigeria
When did the Central Bank of Nigeria commence its operations?
1959
Which country established a nationwide deposit insurance scheme in 1924, serving as an example for other nations like Nigeria?
Czechoslovakia
What effect did the FDIC have on the American financial system despite ongoing bank failures?
Painless impact on the American financial system
What led to the urgent need for the establishment of a Deposit Insurance Scheme in Nigeria?
High rate of indigenous bank failures between 1947 and 1952
Which event led to a significant number of indigenous bank failures in Nigeria by 1954?
$21$ out of $25$ indigenous banks failing
Learn about the purpose and functions of deposit insurance, along with the differences between explicit and implicit deposit insurance systems. Explore the guidelines, funding arrangements, and coverage provided by explicit deposit insurance.
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