ABSTRACT
The primary purpose of establishing microfinance bank in the rural areas of Enugu metropolis is to remedy the problem of rural development in the facing the grass-roots level. The major concept of these microfinance bank establishment is to sustain financial institution in the local areas which are owned, contributed and managed by the community on their credit development basis. The main finding of the research work is by the use of questionnaire and other primary data that are contained in microfinance banks are immensely on a greater importance to the economic development of the rural areas. The objective of the research work therefore abridge gaps of microfinance bank in economic growth and development of productivity in the rural areas, by providing financial and banking service to the low income earners of the economy and the small areas.
TABLE OF CONTENTS
CHAPTER ONE
1.0 INTRODUCTION 1
1.1 BACKGROUND OF THE STUDY 1
1.2 STATEMENT OF THE PROBLEM 4
1.3 OBJECTIVE OF THE STUDY 5
1.4 RESEARCH HYPOTHESIS QUESTION 6
1.5 SIGNIFICANCE OF THE STUDY 7
1.6 SCOPE AND LIMITATION OF THE STUDY 8
1.7 DEFINITION OF TERMS 8
CHAPTER TWO
2.0 REVIEW OF RELATED QUESTION 10
2.1 NATURE AND SCOPE OF MICROFINANCE BANK 15
2.2 CONCEPT OF MICROFINANCE BANKS 17
2.3 THE ROLE OF CENTRAL BANK OF NIGERIA (CBN) 19
2.4 GLOBAL FINANCIAL CRISIS ON
BANKING/ECONOMI 21
2.5 BANK CLASSIFICATION BY CNB 28
REFERENCE
CHAPTER THREE
3.0 RESEARCH DESIGN AND METHODOLOGY 35
3.1 RESEARCH DESIGN 35
3.2 AREA OF STUDY 35
3.3 SOURCE OF DATA 36
3.4 RESEARCH POPULATION AND SAMPLE SIZE 36
3.5 RESEARCH INSTRUMENT 37
3.5 VALIDITY OR RESEARCH INSTRUMENT 38
CHAPTER FOUR
4.0 PRESENTATION, ANALYSIS AND
INTERPRETATION OF DATA 39
4.1 PRESENTATION OF DATA 39
4.2 ANALYSIS OF DATA 40
4.3 INTERPRETATION OF DATA 41
CHAPTER FIVE
5.0 SUMMARY OF FINDINGS, RECOMMENDATION
AND CONCLUSION 46
5.1 SUMMARY OF FINDINGS 46
5.2 RECOMMENDATION 47
5.3 CONCLUSION 50
BIBLIOGRAPHY 51
RESEARCH QUESTIONNAIRE 53
CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Commercial banking is known to have come into existence in about 2500 BC and has since then been playing major roles in the economic development of most countries of the world. Commercial banking operations effect the level of overall economic activities, this means that economic activities depend partly on the operations of commercial banks for survival. Commercial banks render great services to the business community and the various individuals in the society and also the government. The government requires their co-operations in the executing its monetary policies such as the restriction or expansion of credit as and when the need arises.
Enekekwue (2009) further states what Bank do-
To the society they:
Described commercial banks as service industries specializing in the safe keeping of money exchange, collecting cheques, draft notes and other obligation on behalf of the customers while, A.T. Ojo and W. ADequmi (1982:10) in their books banking and finance in Nigeria described “Commercial banks as prime movers behind the whole economic system”. On the whole, these services and assertion go to prove that commercial banking operation (of which microfinance belong to) touch upon the welfare of the entire society. Although microfinance banks are service-rendering industries, they are however profit oriented institutions and essentially seek the profit interest of their shareholder. First and foremost, they may not willingly pursue the goals of the society of the society when these goals are at variance with their organization goals. This, therefore, makes it the duty of the government to ensure a stable economy and full employment. It achieves this through legislation and regulation to control the banking system so that it generates in the directions with regard to the level of aggregate economic activity and for the well being of the society.
Since microfinance banks aim at maximizing profit for their shareholders, they must strive at all times to remain liquid with a strong capital base since banks profitability depends on its access in managing its assets and liabilities.
Liquidity means capacity or ability to produce cash on demand fro deposits. It is absolute necessary for a bank to remain liquid in order to meet customers demand for cash, failure for microfinance banks to meet the customers claims on demand may lead to lack of confidence in microfinance banking operation and in effect lead to a fall in the various deposits in the banks. In the same vain, they must strive to make profit for the shareholders, hence the banks should not be excessively liquid, thereby sacrificing earnings.
The study is aimed at evaluating the performance of old and new indigenous banks in order to ascertain which set has performed better in terms of profitability and liquidity considering the guidelines of the government, which restrict their operations.
1.2 STATEMENT OF THE PROBLEM
For the sake of under development in the rural areas which was confirmed true and the financial resources is also true. The crummy problem is how to tackle or harness this economic resources for the growth and development of the growth and development of the rural areas, knowing that the resources are owned by the community dwellers. The banking sector as the primary sustainer of the nations economic existence is viewed as the most important and reliable sector of the economic, with the present situation, as the case study of Enugu without strategeous economic empowerment with land how income base, the risk of microfinance banking is mostly that of ignorance and illiteracy which the banks are dealing with and the aspect of infrastructural facilities which include electricity, water, roads and residential accommodation for the banking sector especially the staff residing at the rural areas. The delicate problem is that of delicate habit among dwellers like that o traditional saving mobilization eg. isusu.
1.3 OBJECTIVE OF THE STUDY
General purpose of this study is to find out the role of microfinance banks in rural development. Specially, the study seek to investigate:-
1.4 RESEARCH QUESTION
The study seek to find out:-
1.5 SIGNIFICANCE OF THE STUDY
The research work on this case study of “Role of microfinance banks”, will be of great help to the federal government of Nigeria, especially on the rural development authority, because they will be given the privilege to access the performance and improve in their area of low performance will also beneficial to the general public and people earning out of these related topic research.
The topic is great important to the economy at large, since the economic rural economic development involve in providing these social amenities and urban areas to rural areas. These minimize the unusual rural urban migration and lead to massive agriculture and industrial development, the promotion of rural financial and banking services.
1.6 SCOPE AND LIMITATION OF THE STUDY
The purpose of this research work is to ascertain the role of microfinance banks in the rural development.
The researcher when carrying out the researcher this topic encountered some problem that weakened data, these problems include, finance, unavailability of data, time limitation and the respondents of the interviewed.
The limited time given between topic approval and submission data tool limited for the researcher to come out with a comprehensible work.
1.7 DEFINITION OF TERMS
Definition of Microfinance Banks: A microfinance bank is an institution that extends small loans, or micro finance, to poor applicants. A micro finance banks extends small loans to applicants who typically belong to the lowest strata of society. Loans are extended to borrowers to allow them to initiate a business, repair their homes and improve the general living conditions of their families and the community.
REFERENCES
Adewumni W. and A.T. Ojo “Banking and Finance in Nigeria” Published by Graham Burn U.K. (1982).
Emekekwue P.E. Corporate Finance Management. Africa Bureau of Educational Science Dr. Congo (2009).
Nwoko C. “International Control in Business” ABK Books and Equipment Ltd, Enugu & Lagos Nigeria (2008).
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