The Cause of Bank Failure and Its Effect on the Nigeria Economic Development

The Cause of Bank Failure and Its Effect on the Nigeria Economic Development

Project / Seminar Material
Reference ID: PS-11809-TM

DEDICATION

This research material titled “The Cause of Bank Failure and Its Effect on the Nigeria Economic Development” is dedicated to God for his enabling grace, and to all computer enthusiasts who contributed to make life a pleasant experience during my research documentation.

ACKNOWLEDGEMENT

I extend my sincere gratitude to all those who contributed to the completion of this project. Special thanks to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Banking and Finance (BF), Book Authors and Profound Scholars of existing or related project material on “The Cause of Bank Failure and Its Effect on the Nigeria Economic Development” for their invaluable guidance, support, and expertise throughout the journey.

I am also grateful to your study area (mention any funding organizations, if applicable) for their financial assistance. This research would not have been possible without the encouragement and assistance of some stakeholders (mention any mentors, teachers, or colleagues). Additionally, I would like to acknowledge the understanding and patience of my family and friends during this endeavor. Your unwavering support has been a constant source of motivation. Thank you all for being part of this meaningful endeavor.

TABLE OF CONTENTS

PRELIMINARY PAGES

CHAPTER ONE

INTRODUCTION

    CHAPTER TWO

    LITERATURE REVIEW

    • 2.1 Introduction
    • 2.2 Conceptual Review
    • 2.3 Theoretical Framework
    • ⋮
    • 2.4 Empirical Studies

    CHAPTER THREE

    RESEARCH METHODOLOGY

    • 3.1 Introduction
    • 3.2 Research Design
    • 3.3 Population of Study
    • 3.4 Sampling and Sampling Technique
    • 3.5 Validation of Research Instrument
    • 3.6 Method of Data Collection
    • 3.7 Method of Data Analysis
    • 3.8 Questionnaire Administration
    • 3.9 Ethical Consideration
    • 3.10 Statistical Analysis

    CHAPTER FOUR

    DATA ANALYSIS, RESULT AND DISCUSSION

    • 4.1 Introduction
    • 4.2 Presentation and Analysis of Data
    • 4.3 Re-statement of Research Questions
    • 4.4 Test of Hypotheses
    • 4.5 Discussion of Findings

    CHAPTER FIVE

    SUMMARY, CONCLUSION AND RECOMMENDATION

    • 5.1 Introduction
    • 5.2 Summary of Findings
    • 5.3 Conclusion
    • 5.4 Recommendation
    • 5.5 Suggestion for Further Study

    REFERENCES

    APPENDIX A - “QUESTIONNAIRE”

    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

    1. A private company limited by shares shall end with the word “limited”. (Ltd).
    2. Public company limited by shares ends with the words “public limited” (plc)
    3. Company limited by guarantees shall end with the words “ limited by Guarantee)” in brackets (ltd Gtc)

    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.

    1.3 Statement Of The Problem

    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:

    1. Fraud
    2. Unqualified management staffing
    3. Excessive overdraft facilities to customers
    4. Lack of motivation to workers (incentives).
    5. Excess liquidity i.e total operational failures

    While the failures ahs effect on the economy at large, these are listed as follows;

    i. Divestment:

    After a banks failure, instability comes which throws investors off balance and for this reason, the investors will retreat or withhold their investments

    ii. Demand deposit:

    Commercial banks collect this from customers with this agreement to pay interest to the individuals and there by making or creating their own interest or profit by lending to borrowers fails to redeem the loans as when even though the banks had collected some collaterals from them (borrowers).

    1.4 Objective Of The Study

    The main purpose or objective of this research is

    1. To conduct investigation on the causes of bank failures
    2. To know the effect of bank failures on companies i.e (investors) in the economy
    3. To explore and reveal the various failures of banks
    4. To proffer solution and recommendations on the possible ways to solve the problems of bank failures in all sectors of the Nigeria economy

    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

    1. What factors are responsible for bank failure in Nigeria?
    2. Does banks failure have any effect on the Nigeria economy?
    3. What corrective measure could be taken to the effect of bank failures on Nigerian economy?
    4. What are the likely effects of bank failure to the other sectors of the economy?
    5. What are the reactions of the individuals and stake holder/investors towards bank failure in Nigeria?
    6. How has bank distress affected the banking habit of the people in Nigeria?

    1.6 Statement Of Research Hypotheses

    A hypothesis is a proposition that is stated in testable form and prediction of particular relationship between two or more variables.

    1.7 Hypothesis

    1. Ho: There is no relationship between bank fraud and economic development
      Hi: There is a strong relationship between bank fraud and economic development
    2. 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
    …

    CHAPTER TWO

    2.0 Literature Review

    2.1 Introduction

    This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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