CHAPTER ONE
THE BACKGROUND OF STUDIES
The Nigeria
banking are undergoing a major dept crisis. The most serious in its histories
incorporation into the world capital system at the turn of this country. As
with other third world countries, the Nigeria dept crisis is part of a
wilder crisis of accumulation
The dept
crisis of the 1980 is not the first in the country history, indeed, soon after
the Nigeria independence in 1960, the country experience some level of economic
crisis and incurred some external dept. thus, Nigeria external dept which stood
at about 82.4 million in 1960 rose to 435.2 million Naira in 1965 and by 1970
was put to some 400,89 million Naira. The dept consist mainly of long-term loan
from the World Bank.
Further
more, during Shagari, his administration went ahead in 1983 to put the central
bank under increased pressure to open letter of credit at very short notice for
such federal government agencies as the Nigeria police. The constituencies
was that further compounding of the dept crisis.
STATEMENT
OF THE PROBLEM
In the
right of the vital role, which banks should play in the development of the
national economy in their capacity as vector of fund, we point out that the Nigeria
banking system in all its advancement has not succeeded yet ineffectively
archiving this mission. The reason is not just one of the facts that some bank
has failed, but there are other problems associated with them that the research
seeks to address
1.
The lose of public confidence in the banking industry
due to crisis in the sector ( Ekezie, 1994).
2.
The short comings of the regulatory and supervisory authorities
ij handling the crisis (Ehbokgha, 1993)
3.
How the ownership structure of the distressed bank
contribute to their predicament (Ojih, 1998)
There are
numerous problems that are arising and which constitute crisis on the banking
industry and this work will attempt to solve them.
OBJECTIVE OF THE STUDY
Crisis in
the banking industry is a serious problem, which is like table drops in a pool
of water affect every aspect of the economy
1.
To examine the increase in rate as deposition ask for
higher rate of return for passive higher chances of bank failure and
consequence risk of financial lose
2.
To find out the cause of crisis in the banking
industry. This crisis has leaded the unemployment, which leads to fail in
aggregate demand and consequently a reduction in the production level.
3.
To reveal how the deposit run cause crisis in the
banking industry.
4.
To find out how the bank are central to an efficient
and effective payment system in any country. With bank failure, the payment
system will become precarious as the link between the real and the financial
sector including the international settlement will be greatly impaired. This
researcher work will help the management of a bank to mange effectively and
efficiently.
SIGNIFICANCE
OF THE STUDY
The
researcher hope to archive a great thing at the end of the study. This project
will help many that are interested in the banking industry. It will also help
them to know the causes of crisis and how it can be prevented. The study will
be of immense benefit to the following people
1.
Scholars in the field of banking and finance: it will
enlighten the student and afford the opportunity of appreciating the
contribution towards study
2.
Banks: this will be of great benefit to bankers when
they notice fraud or all loan mismanagement that lead to distress. They will
try to prevent it to avoid liquidation
3.
Feature researchers: it will serve as companion to
feature researcher who is interested in the causes of distressed economic
implications and possible remedies.
4.
Investors: it will help them to know that distress
exist in the bank. By so doing they will be careful not to invest in a bank
where there is problem of distress.
5.
Official of regulatory agencies: it will help the
officials of the regulatory agencies to know how to prevent distress from
happening. It will also help to enlighten the public on how distress has cause
a lot of problem in our economy.
LIMITATION OF THE STUDY
The
sensitive nature of the nature of the topic made it difficult for the
researcher to obtain some vital information from banks who when they are ask a
direct question to bank executive, stationed at there head office, as they were
not competent to speak on such matters. To see this executive necessitates
traveling a great distance. This have a telling effect on me financially and
thought about the attendant risk involve considering the nature of our
highways.
Another
constraint was the events of executives of bank refuse to admit this and so
kept a lot of information from me as regarding the CBN brief and NDIC. The most
telling effect was that of time. The time on my hand was very limited. It was
not very easy for me to lay my hands on all the secondary data, which I require
for the study, as the NDCI zonal office in Enugu has not got an equipped library and the
CBN. Library was not equipped enough for the needed information.
DEFINITION
OF TERMS
Crisis: moment of great
danger faced by the banks
Distressed
bank: a bank with managerial operation and financial weakness
Management
efficiency: measure of management qualification, competence and
achievements.
Banks: this is a
place where money is kept and it played out on demand and where a related
activity goes on.
Regulatory/
supervisory authority: this is the central bank of Nigeria (CBN) and the
national deposit insurance company (NDIC)
Operators:
the management and staff of a bank including the shareholders.
REFERENCE
Ekezie
E.S.(991): Managing crisis of distress Nigeria banks,
Management
in Nigeria,
Vol.30, No.2 and 3, September 1994.
Yusuf
bangula (1978): The politic of Nigeria
dept crisis
Ebdukaghe
J.U (1993): contest, content and indices of distress in the bank practical
approach “NDIC “, quarterly Vol.3 Nov.
Onyima B.C
(1994): “ The cause of distress in the banking industry
The Nigeria
accountants.
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