PROPOSAL PAGE
This study is not antagonistic
to any other rather if is complimentary. Other works has been use and are duly
appreciated. But everything is with intent to find a lasting solution to the
issue bank failure.
The study
was based upon data collected through information sifted formbooks general
annual report and periodicals. All the relevant data obtained were analyzed
generally and are used to deduce the findings. The author started by presenting
the proposal.
The chapter
one of the study has to do with the background of the study, statement of the
study, objective of the study, significance of the study, limitation of the
study and definition of terms.
Chapter two
is the literature review of the genesis of banking in Nigeria, function of
banking, similarities and differences among the banks, role of bank in the
economic development, the Nigerian banking climate, problem faced by banks, the
concept of bank failure, indices of bank failure and the effect of bank
failure.
Chapter
three was research methodology, which lead into sampling techniques, data
collection and method of data analysis.
Chapter is
based on finding that results into general discussion.
Chapter is
the recommendation and the conclusion.
ACKNOWLEDGEMENT
My greatest
thanks goes to the almighty God for keeping me alive and providing me with
wisdom to write this project.
I thank
both my uncle Felix Ebele and my elder sister Eseatrice staff (Nigeria Port
Authority) Charity, student, University of Ibadan (UI) Veronica (University of
Ilorin) Ibeabuchi, Chinedu and my lovely cousin Uzochukwu Nwaeze Medicine and
Surgery (Nsuka). I thank them all. To God be the glory.
Finally, I
am very much indepted to my supervisor Mr. D.U.C Iloh for his kindness and
support during the time of preparing and writing of this research project. I
remain royal to him and to all the lecturers in the school of financial studies
I.M.T Enugu, for their support both in academics and morally.
TABLE OF CONTENT
Title page
Aproval
page.
Dedication
Acknowledgement
Table of
content
CHAPTER
ONE:
1.1 THE
BACKGROUND OF THE STUDY
1.2
Statement of problems
1.3
Objective of study
1.4
Significance of study
1.5 Limitation
of study
1.6
Definition of terms
1.7
Reference
CHAPTER
TWO:
2. 0
Literature review
2.1 Genesis
of banking in Nigeria
2.2 Type of
banking in Nigeria
2.3
Functions of banking
2.4
Similarities and differences among banks
2.5 Role of
bank in the economic development
2.6 The Nigeria
banking climate
2.7
Problems faced by banks
2.8 The
concept of banking failure
2.9 Causes
of banking failure
2.10
Indices of banking failure
2.11 Effect
of bank failure
2.12
Reference.
CHATER THREE:
3.1
Research methodology
3.2 Sapling
techniques
3.3 Data
collection
3.4 Source
of secondary data
3.5 Method
of analysis
3.6
Reference
CHAPTER
FOUR:
4.0
Findings
4.1 General
discussion
4.2
Reference
CHAPTER
FIVE:
5.0
Recommendation and conclusion
5.1
Recommendation
5.2 Conclusion
5.3
Biography
CHAPTER ONE
1.1
INTRODUCTION:
Over the
last couple of decades, the Nigeria
financial system has grown remarkably. From the almost crude of it was
characterized with in pre –colonial and colonial days. It has become so
sophisticated toady that economic experts can proudly thumb their chests. With
due regards to the ownership structure of the institution, the regulatory flame
work, the instruments employed, and the number of established institution, Nigeria can be said to posses the most sophisticated
financial system in Africa.
Within the Nigeria
financial system itself, the banking system itself, the banking institution has
been the most remarkable in growth. This is just as well in any case
considering the critical position, which they occupy. In a complex financial
position, which they occupy, in a complex financial position, which supplies
the money and the credit, need of the economy.
The work
bank and banker is neither used or define. In the central of Nigeria (CBN)
degree NO 24 of the 1991 nor bank or other financial institutions decree
(Bofio) No 25 of the 1991 2 of P5.115 of exchange act 1881 provides that
bankers include a body of persons whether incorporated or not who carry out the
business of banking. Section (1) of the evidence act define banks or bankers as
any person or persons, partnership or company carrying on the business of
banking.
Financially,
the banking act of 1969 produces that bank means any person who carries out the
business of banking and include commercial bank and an acceptance house. The
role of banks is thus an important one in the process of economic development
in the sense that they mobilize fund form the surplus spending and for the
economy. In this way they increase the quantum of national saving and investments.
Secondary though an appropriate investment multiplier. The volume of goods
produced increase as a result of projects financed by bank funds, all of which
lead to a successful promotion of an efficient system of payment. Creating
banking habits development in the society and providing employment
opportunities.
In view of
this highlights, it become easily comprehensible why the failure of the bank
has a far – reaching consequence.
The ability
of a bank to operate successfully rest on how well they are able to obtained
the confidence of the public. If that confidence is missing, the gap will be
too great for the bank to fill. The effect of bank failure on the economic
development of Nigeria
can be express in a nut –shell to be the following;
Lack of
effective and efficient financial intimidation:
Loss of
public confidence in the system, further depression of the economic additional
burdens on the regulatory authorities – education of the social vice for the
sake of the citizenry and in the interest of economic development, there is an
expedient need to device a host of remedying situations.
The fact
that a bank fails today is not to say those incidences are not systematic.
There must be a number of ways out of any predicament. The only crack is how
effectively employed. Such remedy includes;
a)
The cultivation of a stable political environment.
b)
The strengthening of the regulatory agency
c)
The taking over by regulatory bodies of all termnacy
distressed banks.
d)
Encouragement of banking education
e)
Sincere pursuit by government of all economy and
monetary policies
f)
All regulation pertaining capital, adequacy, minimum
paid up capital, requidity ratio and quality should be reviewed in relation to
inflation rate.
g)
Privatization and commercialization of all government
owned banks
h)
All dept owned banks by government (state, federal and
even parietals) should be paid back immediately.
i)
All laws relating to bankruptcy and default should be
reviewed and made more effective.
An address
like this will go a long way in remedying the situation and restoring public
confidence in the system.
1.2 STATEMENT OF THE PROBLEMS
In the
light of the vital role which banks play in the development, the national
economy in their capacity as vectors of fund for saving, investment and employment
opportunities. It will be expedient to point out that Nigeria banking system in all its
advancement and sophistications has not succeeded yet in effectively archiving
this mission. The reason is not just the fact that some banks have failed, but
some factor continues to militate against the successful performance of banks.
The problem
of economic under – development in Nigeria can arguably be traced to
the fact that banks has been as efficient as they ought to be. But then a
number of factors have been responsible for the conditions in which banks have
found themselves in today. The effect of bank failure ranges from lose of
depositors fund to loose of confidence (which is the spicing board in the
business of banking) to a total lack of effective financial intermediation such
as to reduce rending to priority sector of the economy and an unusual increase
of distress in other sub – sector. Then the problem of bank failure is not
peculiar to Nigeria
neither is it peculiar to this third world countries, it is universal and the
cause are generally in the same district categories. The only different lies in
the different way through which the situation can be remedied.
THE CAUSE
OF BANK FAILURE
Incompetent
management (both shear holders and management executives), capital inadequacy,
poor internal control, poor asset quality compilation and such factors as
economic environment, socio – political environment and government
1.3 THE
OBJECTIVE OF THE STUDY
The
objective of this study is to critically appraise “ bank failure and economic
development. That is the impact which bank failure has had on the development
of the Nigeria
economy with a view to highlighting the implication on the depositors, the
public, the affected bank, the entire banking industry and the general micro –
economy. Subsequently, and engenders will be portrayed as to how the tied will
be stemmed and the situation tackled in an effective manner.
The study
will go ahead to reveal the prospect of banking in the future.
1.4 SIGINIFICANCE OF THE STUDY
The study
is significance in the sense that a careful appraisal with intent to reveal the
genesis of bank failure in Nigeria,
he root causes of bank failure, how to avert bank failure and in the event of
an inability to avert this, how to deal with the situation effectively.
The study
will be of immense use to scholars in the field of banking and officials of
regulatory agencies and intellectuals in the field of banking.
1.5
LIMITATIONS OF THE STUDY
The
sensitive nature of the study made it very difficult for the researcher to
obtain some very vital information from the banks. A wind who asked that we
direct all information to bank executives stationed at there head offices, as
they were not competent to speak on such matters. Now to see there executive
necessitate traveling a great distance.
This has a
telling effect on us financially. And talk about the attendant risk involves
considering the state of our high ways. Another constraints was that even the
executives of known bank currently under liquidation refuses to admit this and
so kept a lot of information from us that is as regards briefs from (B.M. or
N.O.I.C). The most telling constraint however was time. The time on our hands
was very limited. It was not very easy for us to lay our hands on all the
secondary data, which wee require for the study as the N.O.I.C in Enugu has not
got a library and the C.B.N library was not equipped to our taste.
1.6 DEFINITION OF TERMS
1.
Risk asset: Asset, which by there nature is
prone to lose.
2.
Liquidity: This is the mobility of a bank to
meet its liability as they mature for payment.
3.
Liquidity Ratio: this is the ratio of liquid
asset to total deposit liability.
4.
Insolvency: This is when the value of
realizable asset is less than total value liability.
5.
Liquidation: - The taking over of the asset and
liabilities of a bank by the regulatory agent after the bank has been adjudged
failed.
6.
Holding action: This is action, which prohibits or
curtail certain activities of boards or management or certain activity required
of them to ensure bank safety.
7.
Macro economy: These are the action taking by the
government agency responsible for the conduct of economic prices to archive
desired objectives.
8.
N.D.I.C: Nigeria deposit insurance company.
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