THE CAUSE OF BANK FAILURE AND ITS EFFECT ON THE NIGERIA ECONOMIC DEVELOPMENT
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Commercial Banks are legal entity with perpetual succession formed as a corporate body under law, by an association of person, Basil (2001: 1) according to companies and Allied matters Act 1990 section 29, companies are classified into three types
It is based on these that we shall call to mind on the issues concerning financial organizations. A financial institution is a business organization and establishment, which deals with money and financial assets such as shares, bills of exchange, treasury bills etc. Augustine (2003:38).
Financial institution are regarded as banks, which is comprised of central banks, commercial banks (known as joint stock banks) and others. Financial institutions do not focus on banks as long but those institutions which pool or mobilize savings and excess liquidity from individuals, firms, corporate bodies etc.
It is obvious for one to know that a country or an economy cannot stand without a proper banking system. Banks originated from man’s question for store-keeping or safe keeping of wealth.
1.2 BACKGROUND OF THE CASE STUDY (ECOBANK)
Company’s profile of Ecobank
Ecobank Nigeria Plc, commonly referred to as Ecobank Nigeria, is a commercial bank in Nigeria. It is one of the commercial banks licensed by the central Bank of Nigeria the national banking regulator. The bank was established in 1985 and began operations in 1986. It operates as a universal bank providing wholesale, retail, corporate, investment and transaction banking services to its customers in the Nigerian market. The bank divides its operations into three major divisions: (a) Retail Banking (b) wholesale banking and (c) Treasury and financial institutions. The bank also offers capital markets and investment banking services during the forth quarter of 2011. Ecobank Nigeria acquired 100%of the shareholding in Ecobank, creating the expanded Ecobank Nigeria Plc.
The statement of the problem serves as the corner stone upon which the gross research plan is based, Baridam (1993: 22). It is quite convincing that a “sound banking system is a healthy economy”. As we have previously discussed, there was an up ward trend in the failure of banks in the recent decades. A tendency, which though is not peculiar to Nigerians can impede the economy and affect the public adversely. This takes into consideration, the problems that are responsible for the banks which are as follows:
While the failures ahs effect on the economy at large, these are listed as follows;
1.4 OBJECTIVE OF THE STUDY
The main purpose or objective of this research is
1.5 RESEARCH QUESTIONS
It is clear that a bank cannot fail without any sigh that means, that these are some other things that must have contributed in the failure of such organizations which we expect from the respondents to highlights us on them in this project: they are
A hypothesis is a proposition that is stated in testable form and prediction of particular relationship between two or more variables.
Hypothesis
Ho: There is no relationship between bank fraud and economic development
Hi There is a strong relationship between bank fraud and economic development
H0: there is no strong relationship between poor bank financial management and distress in the banking sector.
Hi: Poor bank management leads to frauds and distress in the banking sector
This study will render a vital services to all the sectors in this economy. The banking sector is widely regarded as the financing or the financial power house to all other sectors in the economy internally and externally.
This study is obviously significant to the
This study focuses on commercial banks because of its role in Nigerian banking sector, although other banking sector will be investigated.
The foreseen limitation to this study would be:
Time: Considering the academic work load on campus, time is foreseen to be a limiting factor.
Finance: money in the economy is not quite enough and any project demands for therefore, finance is one of the limiting factors to this study.
Data collection: This could be problematic for some of the reasons concerning the negative altitudes of business organizations to the questionnaires. They may be afraid of disclosing their personal data to their competing rivals. The bank staff too, for some undisclosed reasons could not give us sufficient and useful information.
Bankers drafts: This is a bill of exchange drawn by a bank on another branch office of the same bank.
Bankers habit: This means the extent or degree of willingness of the people in a given economy to make use of the facilities and services of bank sector.
Collateral: Assets pledged for securing a loan
Liquidity: It can be defined as the ability of a bank to meet its day to day cash obligation on the depositors
Moral Suasion: it involves the use of persuasion and appeal by the CBN to commercial banks to cope with the CBN guidelines.
Monetary policy: it is policy of government which influences the timing availability and cost of money and credit to the economy in other words; it is a deliberate measures design in the monetary authorities of a country to regulate, influence and control the volume of money circulation.
Treasury certificate: This is a money market instrument. It is used for raising money from the government for a duration of 1-2 years issued at a discount rate.
Bank overdraft: This a bank facility granted by a bank to a customer on agreed conditions to overdraw his account up to a certain limit on interest rate.
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