DISTRESS IN BANKING – ITS IMPLICATION FOR THE GROWTH OF BANKING INDUSTRY IN NIGERIA
ABSTRACT
Distress in Banking: Its implication for the growth of banking in industry in Nigeria. This research is divided into five (5) chapters:
The research design will contain in the main purpose of research, formulating hypothesis e.g. absence of entrepreneurial skill is an impediments to efficient bank management in Nigeria. Sharp practices are contribution factor of bank failure in Nigeria e.t.c. Operationalization of research, this shows the set of operations, which the researcher must carry out to test the hypothesis raised. A set of questionnaire will be raised to elicit response from bankers and the banking public to enable the hypothesis to be tested
Experimentation involves the execution of an experiment based on the operational zed hypothesis .A survey research method of observation will be used because the research focuses on individual persons / institution as item of analysis and because of the interest of the researchers on collecting original data and the facts that the population is high for other methods to apply effectively.
The literature review will follow quantitative data analysis. This involves the step in converting data generated into a form appropriate to quantitative analysis that is the techniques to analyze process of converting social science data into machine readable form since so many variables will be tested in this research, such techniques as correlation analysis, multi correlation etc, will be adopted with the help of a data processing machine.
Concluding chapter, the outcome of a data analysis will enable me draw conclusions and make recommendation for future research endeavor in this area and the society at large.
CHAPTER ONE
CHAPTER TWO
CHAPTER THREE
CHAPTER FOUR
4.1 Data presentation and analysis
Test of hypothesis
CHAPTER FIVE
5.1 Conclusion
Bibliography
Appendix: questionnaire
CHAPTER ONE
In any modern economy, the efficient production and exchange of goods and services required money and bank is the instrument for affecting it. Banks plays a very vital role in economic life of a country particularly a developing country like Nigeria through the provision of banking services .As agent of development, they provide loans and advances including a variety of contingent facilities, which could be short, medium, or long term facilities to their numerous customers
For any meaningful research into the problems of banking industry in Nigeria, an over-view of the historical antecedents are necessary
Orji.J. (1996); states that commercial banking in Nigeria comes into existence in the year 1892 when the bank of British Plc was established, twenty-five years later. Barclays Bank DCO (dominion colonial and overseas) now union bank of Nigeria plc was established in 1997 the two expatriate banks mentioned above were joined in 1929 by another foreign bank, the British and French bank now known as UBA united Bank for Africa limited. These three foreign banks monopolized the banking scene until National Bank of Nigeria limited, the first indigenous bank was established in 1933.However, the first phase of banking development in Nigeria was established in 1933 and were devoid of any banking regulation and this was the era of free banking. “Ukaemanam, C.O (2001)” holds it that before 1952 anybody theoretically could set up a banking business provided it was registered under company ordinances. Thus, the period between 1892 to 1952 were regarded by central bank authorities as a period “free for all banking” This is accounted for the spate of indigenous boom. Out of the many indigenous banks established in the period of banking boom i e 1930’s – 40’s, only few of them rose up to the challenges, while a host of others fail very rapidly. It was this period that the signer of banking distress was first noticed in Nigeria.
The failure experienced by indigenous banks was attributed to mismanagement under capitalization and absence of a regulatory environment, the massive bank failure of the 1930’s and 40’swas enough justification for the modern days regulatory framework.
The banking ordinance of 1952 was the first attempt to provide a regulatory framework for the development of a sound banking industry in Nigeria. Following this was the birth of central bank of Nigeria in 1959.At independence; so many other foreign banks came to take advantages of the opportunity ushered in by political independence.
The piston commission of enquiry (1981) provided antidotes to the problem plaguing the industry .In addition to banking ordinance, it recommended that no new bank without adequate capitalization would be allowed to established in the country and that existing banks after three years of grace had to satisfy
The new requirement by 1970, there were seventeen 17 commercial banks licensed in Nigeria .ten new foreign banks, five indigenous banks and two banks partly owned by Nigerians and Non- Nigeria .The period from 1970 to 1977 marked a new phase in evolution of banking in Nigeria. This period witnessed the indigenization of Nigeria banking industry .1993, the federal government in pursuance of its indigenization policy acquired 40%owernship in three largest expatriate commercial banks. In the second phase of the exercise in 1976, the government reduced the foreign interest in all commercial banks to 40% and proceeded to acquire the share bank necessary to bring Nigeria share holding to 60%. This period also witnessed reviewed boom in indigenous banking, but this time, the indigenous banks were owned by the state government.
This Pius Okigbo’s financial review commission’s report 19976to a spade of establishment of banks branches especially in the rural area. This rural banking scheme increased the branch network from 472in 1976 to 1,483 in 1987. In 1988, the Nigerian deposited insurance cooperation (NDIC) was established to further increase the regulation framework against crisis and failures thereby strengthen the financial system. In furtherance of the rural banking scheme, the peoples bank, federal government outfit was established in 1987 and later in 1990, the community banks were established six years later, the number of community banks established all around arose up to about 1,047.
Anyanwuokoro .M.(2001)” states that the federal government outfit was established in 1992, the bank and other financial instituted decree (BOFID) to curtail the sharp practices in banking industry in Nigeria. The decree empowered a tribunal of injury to bring before it any person group of persons who criminally defraud the banks and other financial houses of public fund.
The first half of the 1990’s was also boom period in the Nigerian banking industry. So many commercial, merchant banks and financial houses sprang up and almost immediately the cycle of boom followed with so many of them failing like a pack of cards, infact, Nigeria witnessed the worst bank crisis in recorded history in 1990’s.During this period, almost over 40 banks fell and depositors lost over N 25 billion. Trapped in the vault of these failed banks. The distress through the economy into aspin and was only successfully addressed by the government of the day, when it is forced some defaulter to refund some money into the system.
This did not however, translate into depositors who having their monies during that period have had no cause to visit any bank again. However most of the banks which emerged out of liberalization of the 90’s.a period which is being repeated by the present day government.
“ Atojoko .S. (2002)” said that year 2003 has brought yet another saga into the Nigeria banking industry with the fall of savannah bank and the indication from the central bank of Nigeria (C.B.N.) spokes man Tony Ede said that about 21 banks may go the way of savannah bank. Fear gripped depositors nationwide because C.B.N refused to publish the name of the 21 banks. However, from all indication, C.B.N.revoked the savannah bank license, citing deteriorations as reasons.
The fall of savannah bank was followed by that of all-states banks which events took place in the recent past, 2005 and so many others which could not meet up to the new N 25 billion capital base or capitalization for commercial and merchant bank. N 5 million to all community bank and N 100 billion to development bank of Nigeria. Professor Charles Soludo. This banking consolidation reforms in Nigeria started off immediately professor Charles soludo took up power as a governor of C.B.N. from Joseph sanus in the year June 2004.
The implications of banking failures are usually grave in any economy, the banking public are forced to fore go their hard earned wealth to fraud starts in the banking industry. This is why even today there is a growing loss of confidence in the banking industry. Again it affects the investment climate of the country since banks are important aims of development process, any lack of confidence in the industry will reduced investment, especially foreign investors that is so much needed to inject funds into the economy. The macro economy effects of this is oblivious, it will affect the overall growth and development process of the economy.
On the other part of government, bank failure results in financial instability, and indications of a failure of its regulatory framework / apparatus. A period of instability, insecurity of citizen’s funds could lead to over having the machinery of financial regulatory to provide an enabling environment for citizens and foreigners to do business in the country. Again, there is the fear that such bank crisis will lead to a banking recessions to the overall economy. The already parlous state of saving will be seen as lack of confidence in the banks and will lead to increase in consumption and reduction of saving and investment.
The purpose of study is to have an over view of the historical and decadence of this phenomenon in banking failure otherwise known as distress in banking.
Investigation into the reasons for bank failure in Nigeria. Examine the implication of bank distress in the macro-economy of Nigeria and development of the banking industry in Nigeria.
Proper suggestions as to curtail this ridiculous phenomenon in the Nigeria banking industry.
RESEARCH QUESTIONS
This study significant because of the need to help this ugly phenomenon and to restore confidence in the banking industry. It is also needed to guarantee the investing public and more especially the foreign investors of stable investment climate that could enable them do business in Nigeria. Since a steady growth in the banking industry could l ea to a sustained development in this overall economy, the outcome of this research is of great significance. To the government, the recommendation and finding of this research would be considered valuable in its bid to stabilize the banking industry and the macro-economy as a whole
While the banking industry in Nigeria will theoretically serve as the population of study, only banking in Enugu and Delta state will be sampled for survey. The subject of this study will include sampled equity holders, bank management, bank workers, bank clients (the banking public) central bank management and federal and federal ministry of financial staff and management
.
I hope to use sets of questionnaire to be administered to both staff and customers of those banks. As partner in the banking industry, the staff questionnaire will provide information as per cause of banking distress and how distress affects the banking industry. The customer’s questionnaire would collaborate or otherwise the staff claim some issues and perhaps provide on external assessment of the bank.
REFERENCES
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COMPLETE MATERIAL COST N2,500 Or $10. FRESH PROJECT MATERIAL COST 50,000 NAIRA FOR UNDERGRADUATE, OTHERS 100,000 -200,000 NAIRA.
THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE
Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
Account Number: 0117780667.
Swift Code: GTBINGLA
Dollar conversion rate for Naira is 175 per dollar.
ATM CARD: YOU CAN ALSO MAKE PAYMENT USING YOUR ATM CARD OR ONLINE TRANSFER. PLEASE CONTACT YOUR BANK SECURITY FOR GUIDE ON HOW TO TRANSFER MONEY TO OTHER BANKS USING YOUR ATM CARD. ATM CARD OR ONLINE BANK TRANSFER IS FASTER FOR QUICK DELIVERY TO YOUR EMAIL . OUR MARKETER WILL RESPOND TO YOU ANY TIME OF THE DAY. WE SUPPORT CBN CASHLESS SOCIETY.
OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.
form>DELIVERY PERIOD FOR BANK PAYMENT IS LESS THAN 24 HOURS
CALL OUR CUSTOMERS CARE OKEKE CHIDI C ON : 08074466939,08063386834.
AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO
08074466939 or 08063386834, YOUR PROJECT TITLE YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.
WE HAVE SECURITY IN OUR BUSINESS.
ABSTRACT
Distress in Banking: Its implication for the growth of banking in industry in Nigeria. This research is divided into five (5) chapters:
- Research Design
- Literature Review
- Operationalization of Research
- Research Analysis and
- Experimentation and Conclusion
The research design will contain in the main purpose of research, formulating hypothesis e.g. absence of entrepreneurial skill is an impediments to efficient bank management in Nigeria. Sharp practices are contribution factor of bank failure in Nigeria e.t.c. Operationalization of research, this shows the set of operations, which the researcher must carry out to test the hypothesis raised. A set of questionnaire will be raised to elicit response from bankers and the banking public to enable the hypothesis to be tested
Experimentation involves the execution of an experiment based on the operational zed hypothesis .A survey research method of observation will be used because the research focuses on individual persons / institution as item of analysis and because of the interest of the researchers on collecting original data and the facts that the population is high for other methods to apply effectively.
The literature review will follow quantitative data analysis. This involves the step in converting data generated into a form appropriate to quantitative analysis that is the techniques to analyze process of converting social science data into machine readable form since so many variables will be tested in this research, such techniques as correlation analysis, multi correlation etc, will be adopted with the help of a data processing machine.
Concluding chapter, the outcome of a data analysis will enable me draw conclusions and make recommendation for future research endeavor in this area and the society at large.
CHAPTER ONE
- INTRODUCTION
- Background of the study
- Statement of the problem
- Purpose of the study
- Research questions
- Hypothesis
- Significance of the study
- Scope of limitation
- Research methodology
CHAPTER TWO
- Review of related study
- Definition of distress in banking
- Banking failure, some antecedents
- Current state of banking in Nigeria
- Symptoms of distressed bank in Nigeria
- Causes of banking distress
- Regulation, deposited insurance and bank failure
- Banking fraud and bank distress
- Risk management and bank failure
- The role of bank in economy system
CHAPTER THREE
- Design and procedure
- Sample area
- Sample subject
- Instrument of study
- Data collection
- Statistical techniques used
CHAPTER FOUR
- Data presentation and analysis
4.1 Data presentation and analysis
Test of hypothesis
CHAPTER FIVE
- Summary of findings, conclusion and recommendation
5.1 Conclusion
- Recommendation
Bibliography
Appendix: questionnaire
CHAPTER ONE
- INTRODUCTION
In any modern economy, the efficient production and exchange of goods and services required money and bank is the instrument for affecting it. Banks plays a very vital role in economic life of a country particularly a developing country like Nigeria through the provision of banking services .As agent of development, they provide loans and advances including a variety of contingent facilities, which could be short, medium, or long term facilities to their numerous customers
For any meaningful research into the problems of banking industry in Nigeria, an over-view of the historical antecedents are necessary
Orji.J. (1996); states that commercial banking in Nigeria comes into existence in the year 1892 when the bank of British Plc was established, twenty-five years later. Barclays Bank DCO (dominion colonial and overseas) now union bank of Nigeria plc was established in 1997 the two expatriate banks mentioned above were joined in 1929 by another foreign bank, the British and French bank now known as UBA united Bank for Africa limited. These three foreign banks monopolized the banking scene until National Bank of Nigeria limited, the first indigenous bank was established in 1933.However, the first phase of banking development in Nigeria was established in 1933 and were devoid of any banking regulation and this was the era of free banking. “Ukaemanam, C.O (2001)” holds it that before 1952 anybody theoretically could set up a banking business provided it was registered under company ordinances. Thus, the period between 1892 to 1952 were regarded by central bank authorities as a period “free for all banking” This is accounted for the spate of indigenous boom. Out of the many indigenous banks established in the period of banking boom i e 1930’s – 40’s, only few of them rose up to the challenges, while a host of others fail very rapidly. It was this period that the signer of banking distress was first noticed in Nigeria.
The failure experienced by indigenous banks was attributed to mismanagement under capitalization and absence of a regulatory environment, the massive bank failure of the 1930’s and 40’swas enough justification for the modern days regulatory framework.
The banking ordinance of 1952 was the first attempt to provide a regulatory framework for the development of a sound banking industry in Nigeria. Following this was the birth of central bank of Nigeria in 1959.At independence; so many other foreign banks came to take advantages of the opportunity ushered in by political independence.
The piston commission of enquiry (1981) provided antidotes to the problem plaguing the industry .In addition to banking ordinance, it recommended that no new bank without adequate capitalization would be allowed to established in the country and that existing banks after three years of grace had to satisfy
The new requirement by 1970, there were seventeen 17 commercial banks licensed in Nigeria .ten new foreign banks, five indigenous banks and two banks partly owned by Nigerians and Non- Nigeria .The period from 1970 to 1977 marked a new phase in evolution of banking in Nigeria. This period witnessed the indigenization of Nigeria banking industry .1993, the federal government in pursuance of its indigenization policy acquired 40%owernship in three largest expatriate commercial banks. In the second phase of the exercise in 1976, the government reduced the foreign interest in all commercial banks to 40% and proceeded to acquire the share bank necessary to bring Nigeria share holding to 60%. This period also witnessed reviewed boom in indigenous banking, but this time, the indigenous banks were owned by the state government.
This Pius Okigbo’s financial review commission’s report 19976to a spade of establishment of banks branches especially in the rural area. This rural banking scheme increased the branch network from 472in 1976 to 1,483 in 1987. In 1988, the Nigerian deposited insurance cooperation (NDIC) was established to further increase the regulation framework against crisis and failures thereby strengthen the financial system. In furtherance of the rural banking scheme, the peoples bank, federal government outfit was established in 1987 and later in 1990, the community banks were established six years later, the number of community banks established all around arose up to about 1,047.
Anyanwuokoro .M.(2001)” states that the federal government outfit was established in 1992, the bank and other financial instituted decree (BOFID) to curtail the sharp practices in banking industry in Nigeria. The decree empowered a tribunal of injury to bring before it any person group of persons who criminally defraud the banks and other financial houses of public fund.
The first half of the 1990’s was also boom period in the Nigerian banking industry. So many commercial, merchant banks and financial houses sprang up and almost immediately the cycle of boom followed with so many of them failing like a pack of cards, infact, Nigeria witnessed the worst bank crisis in recorded history in 1990’s.During this period, almost over 40 banks fell and depositors lost over N 25 billion. Trapped in the vault of these failed banks. The distress through the economy into aspin and was only successfully addressed by the government of the day, when it is forced some defaulter to refund some money into the system.
This did not however, translate into depositors who having their monies during that period have had no cause to visit any bank again. However most of the banks which emerged out of liberalization of the 90’s.a period which is being repeated by the present day government.
“ Atojoko .S. (2002)” said that year 2003 has brought yet another saga into the Nigeria banking industry with the fall of savannah bank and the indication from the central bank of Nigeria (C.B.N.) spokes man Tony Ede said that about 21 banks may go the way of savannah bank. Fear gripped depositors nationwide because C.B.N refused to publish the name of the 21 banks. However, from all indication, C.B.N.revoked the savannah bank license, citing deteriorations as reasons.
The fall of savannah bank was followed by that of all-states banks which events took place in the recent past, 2005 and so many others which could not meet up to the new N 25 billion capital base or capitalization for commercial and merchant bank. N 5 million to all community bank and N 100 billion to development bank of Nigeria. Professor Charles Soludo. This banking consolidation reforms in Nigeria started off immediately professor Charles soludo took up power as a governor of C.B.N. from Joseph sanus in the year June 2004.
- STATEMENT OF PROBLEM
The implications of banking failures are usually grave in any economy, the banking public are forced to fore go their hard earned wealth to fraud starts in the banking industry. This is why even today there is a growing loss of confidence in the banking industry. Again it affects the investment climate of the country since banks are important aims of development process, any lack of confidence in the industry will reduced investment, especially foreign investors that is so much needed to inject funds into the economy. The macro economy effects of this is oblivious, it will affect the overall growth and development process of the economy.
On the other part of government, bank failure results in financial instability, and indications of a failure of its regulatory framework / apparatus. A period of instability, insecurity of citizen’s funds could lead to over having the machinery of financial regulatory to provide an enabling environment for citizens and foreigners to do business in the country. Again, there is the fear that such bank crisis will lead to a banking recessions to the overall economy. The already parlous state of saving will be seen as lack of confidence in the banks and will lead to increase in consumption and reduction of saving and investment.
- PURPOSE OF STUDY
The purpose of study is to have an over view of the historical and decadence of this phenomenon in banking failure otherwise known as distress in banking.
Investigation into the reasons for bank failure in Nigeria. Examine the implication of bank distress in the macro-economy of Nigeria and development of the banking industry in Nigeria.
Proper suggestions as to curtail this ridiculous phenomenon in the Nigeria banking industry.
RESEARCH QUESTIONS
What is distress in banking?
What are the effects of distress?
Are the distress signals a creation of mischief-makers?
What are the possible solutions to this great phenomenon in the banking scene
1.5 HYPOTHESIS
1 HO: Distress in banking is a new phenomenon in banking industry.
Hi : Distress in banking is not a new phenomenon in banking industry.
2 HO: under capitalization of most banks has led to financial insolvency.
Hi: under capitalization of most banks has not lead to financial insolvency.
3 HO: Absence of effective management audit has led to financial crisis of banks
Hi: Absence of effective management audit has not lead to financial crisis of banks.
4 HO: Bank failure has no negative impact on the macro-economy of Nigeria.
Hi: Bank failure has negative impact on the macro-economy of Nigeria.
4 HO: The growing lack of confidence in Nigeria banks has not lead to recession in the banking industry.
Hi: The growing lack of confidence in Nigeria banks has led to recession in the banking industry
- SIGNIFICANCE OF STUDY
This study significant because of the need to help this ugly phenomenon and to restore confidence in the banking industry. It is also needed to guarantee the investing public and more especially the foreign investors of stable investment climate that could enable them do business in Nigeria. Since a steady growth in the banking industry could l ea to a sustained development in this overall economy, the outcome of this research is of great significance. To the government, the recommendation and finding of this research would be considered valuable in its bid to stabilize the banking industry and the macro-economy as a whole
- SCOPE AND LIMITATION
While the banking industry in Nigeria will theoretically serve as the population of study, only banking in Enugu and Delta state will be sampled for survey. The subject of this study will include sampled equity holders, bank management, bank workers, bank clients (the banking public) central bank management and federal and federal ministry of financial staff and management
.
- RESEARCH METHODOLOGY
I hope to use sets of questionnaire to be administered to both staff and customers of those banks. As partner in the banking industry, the staff questionnaire will provide information as per cause of banking distress and how distress affects the banking industry. The customer’s questionnaire would collaborate or otherwise the staff claim some issues and perhaps provide on external assessment of the bank.
REFERENCES
1 Anyanwokoro,.M.(2001): Banking operations Enugu: Hosanna publication,pp 7-9
2 Orji .J. (1996). Element of banking Enugu: Rock communication publishers pp. 44-49
3 Ukemenam, C.O. (2001) practice of banking for students and professionals. Enugu: Okere publishers, pp. 1-6
4 Atojoko, S. (2002) “crash of savannah bank”. News watch vol.35, No. 9 march, and pp 48-50.
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COMPLETE MATERIAL COST N2,500 Or $10. FRESH PROJECT MATERIAL COST 50,000 NAIRA FOR UNDERGRADUATE, OTHERS 100,000 -200,000 NAIRA.
THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE
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Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
Account Number: 0117780667.
Swift Code: GTBINGLA
Dollar conversion rate for Naira is 175 per dollar.
ATM CARD: YOU CAN ALSO MAKE PAYMENT USING YOUR ATM CARD OR ONLINE TRANSFER. PLEASE CONTACT YOUR BANK SECURITY FOR GUIDE ON HOW TO TRANSFER MONEY TO OTHER BANKS USING YOUR ATM CARD. ATM CARD OR ONLINE BANK TRANSFER IS FASTER FOR QUICK DELIVERY TO YOUR EMAIL . OUR MARKETER WILL RESPOND TO YOU ANY TIME OF THE DAY. WE SUPPORT CBN CASHLESS SOCIETY.
OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.
form>DELIVERY PERIOD FOR BANK PAYMENT IS LESS THAN 24 HOURS
CALL OUR CUSTOMERS CARE OKEKE CHIDI C ON : 08074466939,08063386834.
AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO
08074466939 or 08063386834, YOUR PROJECT TITLE YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.
WE HAVE SECURITY IN OUR BUSINESS.
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