Compare between American unit banking and that of Nigerian branch banking?

Answer 1

Branch banking is the type of banking system prevalent in Nigeria. It is a system bequeathed to the country by thee British financial system having been its colony before. Nigeria banks have Head Offices either in Lagos or Abuja or the state capital of the owner government (where State banks still exist). Branches are spread throughout the country. The number of branches help the banks to mobilise deposits and make loans and enables optimal liquidity management. While unit banking in the US is basically as a result of State Banking Commissions powers to issues charters to banks within their territory. The controller of currency issues charters to national banks (those banks that can spread nationally), while the Central Bank of Nigeria issues the single license to operating banks in the country though permits are required when banks open new branches.

The variant of unit banking that exist in Nigeria is that of the erstwhile community banks that have now transformed into Micro finance banks. Even then the Micro finance banks can now expand across the states if they can have increased capital base ten times the single unit. Just as unit banking is fading and becoming anachronistic in the US, the micro finance banks have opportunity to expand if they are interested and can afford it. Unit banks system is costly to run.