This project was prompted by obvious dominant bank failure in the Nigeria Economy. The recent urge is to know the extent to which the financial sector affects the economic life of the people. Therefore led to the analysis, which prove the fact and various systems to checkmate the situation.
This project is categorized into positive and negative effect of bank on the basis of their economic contributions, which thus, the negative effect would be highly revealed as a result of the regressional base in the Nigeria economy.
The method of study measure up current abnormalities that exist in the sector using qualitative and quantitative analytical data’s as to attain its objective furthermore the presentation and analysis in chapter four revealed unethical approach in banking system and their effect in managing the system.
Lastly is chapter five which drew conclusion to the project followed by the biography and index
This research work will be carried out using all internal control questionnaire from banks in strategic state in Nigeria like Enugu, Lagos, Port Harcourt and Abuja. The research has used hypothetical data like chi-square to analyze the quantitative that concern bank fail in Nigeria.
TABLE OF CONTENT
Declaration
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE
Background of the study
2.0 Legal proceedings on banks
2.1 Large scale fraudulent practices
2.2 Reasons for committing fraud.
CHAPTER TWO
LITERATURE REVIEW
2.3 The history of banking in Nigeria
2.4 Foreign based in Nigeria
2.5 Establishment of content bank in Nigeria
2.6 The commercial banks
2.7 Indigenous banks
2.8 Merchant bank
2.9 Community bank.
3.0 Federal Martage bank
3.1 Development banks
3.2 Nigeria Agricultural and cooperative banks
3.3 The Nigeria bank for commerce and industry
3.4 Urban Development bank
3.5 Finance companies
3.6 Insurance companies
3.7 Excess liquidity data
3.8 Structure and growth of banks
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.9 Sample size and sample techniques
4.0 Method of data collection
4.1 Method of data presentation
CHAPTER FOUR
DATA PRESENATION AND ANALYSIS
4.3 Hypothesis of study I
4.4 Hypothesis of study II
4.5 Hypothesis of study III
4.6 Research Assessment
4.7 Researched Experienced
4.8 Measures to meet standard.
CHAPTER FIVE
CONCLUSION
4.9 Findings
5.0 Recommendation
5.1 References
5.2 Appendix
CHAPTER ONE
BACKGROUND OF THE STUDY
Bank has been defined in various ways by different people. It is basically a service industry operated by people for the general interest of the public providing a mechanism for the mobilization of finds from surplus units in the economy and channeling them to the deficit units through extension of credits. The link between this surplus and deficit is actually vital because it facilitate business transaction and economic development. As an economic unit. The business enterprises acquires organizes and transforms factors of production in the activity of producing goods and services, the way in which these goods and services or input factors are combined and transformed units an output flow may be considered as problem of maximizing an output from a given input. As a result, the advent of banking institution and its scope limitation was to that business activities findings their expressions in monetary terms.
The banking institution is defined in section 61 of the bank and financial institution decree sub-section 21 of 1991 as a business of receiving cheques, deposits on current accounts saving accounts or other account like paying or collecting cheques drawn by or paid in by customers, provision of finance or such other business or services for the government and the entire economy
1.1 SCHEDULE OF BANKS IN NIGERIA
The banking system in Nigeria is controlled by one body known as the Central Bank of Nigeria (CBN) which serves as a clearing house fro economic purpose. It veins of control in the naming include Commercial Bank, merchant banks, special banks like mortgaged bank, development banks such as Nigeria banks for commerce and industry, Nigeria agricultural and cooperate banks, peoples bank and community banks.
The banking system is a regulated sector of government and we could understand that its nature of activities spelt out the position it occupy in the economy since the funds they lend to deficit units are owned by third parties, therefore prudence on accounting theories and principle4s demands that such funds should be managed properly to sustain the confidence of the depositors. As a result of this prudential requirement, the authorities would want to interven in the operation and control of the banking system to correct all the short coming of the price fixing mechanism in ensuring that what is commercially reserve for an individual bank also approximate social rationnaties as much as possible. Example interest rates charges by banks may be regulated to encourage savings mobilization, bankiung habits and ensure adequate investment for rapid economicx growth. Considering the imperfect market in most economy both developed and developing financial institution often include government intervention to boost investment redirect credit to economic sectors with social but low commercial rates returns. These and a lot of other rationaties pre-informed government thinking towards regulation contract in it and also supervise the sector. Experience here, therefore shows that authorities short fall in financial intervention does affect the finance market function as shall illustrated in hypothesis I. Such intervention frequently result in new economic desertion leading to less optimal result to resource utilization. For example, the establishment of new banks in pre-SAP (structural adjustment programme) era was highly restricted, the existing once constituting a king of oligopoly did not really care either to extend their services to the rural communities or care for how to improve their activities and operation pattern
Consequently economic deregulation has often been resorted to in order to remove or minimize those desertion. Deregulation implies the relaxing or minimization of control or regulation. Financial market are usually first sector of the economy to be subjected to deregulation in view of their strategic locations.
The campaign for deregulation of financial institution has bee vigorously undertaken in many developed and developing economy. Example in United State of America regulation which had imposed interest rate ceilings on the deposit of the federal reserve banks was abolished in 1983. recently, a member of third world countries with heavy debt burden and dwindling foreign exchange earning has also adopted policies to deregulated their economy particularly the financial institution in the economy.
This has usually been carried out as part of comprehensive structured and statistical experience to stop large scale fraudulent practices. It also follows with the reasons for committing fraudulent art and ended with a computer abuses in the banking industry.
1.2 OBJECTIVE OF THE STUDY
Following the background introduces the study of aims which analyses the factors that lead to the bank failure in Nigeria ands its consequences and as well as various measures taken to prevent or minimize such occurrence in future
The main aim for the study is an assessment of bank failure in Nigeria which necessitated the conduct of general banking system and tool included the rural and urban satisfaction of service from commercial and merchant banks in Nigeria economy
Economically, lack of development roles in banking programme an unethical practices in the financial institution, the lending system in a developing economy, savings system and deposit system has contributed immensely to a stand still financial institutions. There are other undesirable internal and external factors that affected the Nigeria banking system both in Nigeria and the global world in general.
However, this study is automatically recommended to treat various steps to be taken by the authorities to checkmate fragment fall in financial institution as to restore the eroded public confidence in the financial institutions.
1.3 THE JUSTIFICATION OF THE STUDY
Interested banking programme in 1977 was rural banking system, the programme was raised in Nigeria to motivate rural dwellers to cultivate the idea of mobilization of profit from various ventures for saving purpose.
But as pointed earlier the deregulation formula and excessive licensing of new banks have brought a lot of charges in the banking system leading to over competition operational techniques has changed to an era of strike competition including (SAP) structural adjustment programme. These whole problems lead to banks inability to fulfill their present obligation.
Recently, the confidence and stability of banking industry is threatened and that lead to a call for chartered institute of bankers and insurance and the federal government non stop to further issue of license to new banks in Nigeria. The need for these procedures is to study the people desire and examine savings mobilization and creation and expansion in the economy. It is also an effort to evaluate the Agricultural and agro allied industries development using banking scheme to checkmate the ability to source funds and make loans and advances available. These justification has been hindered immensely by poor performance of banking consequences of bank strategies, the commercial and merchant bank objectives is to maximize profit but other social and economic functions deflect banks from profit maximations as their primary objectives. Since bank is a commercial or service venture, it raise profit so as to give confidence to the public and depositors as well as impression of management efficiency and to the shareholders. In order to maximize the profit banks attempt structure their assets and liabilities in such a way yield returns subject to some constraints. However in a violated economic environment as ours where things change quite rapidly and with banking education and business, experience yet to recognize bank failure in Nigeria and modern system of computer banking to bring improvement, a bank would have been caught off guard because of poor administrative control of its loan portfolio.
Under certain or prevailing economic uncertainties a business man lives more on his wits ore capacity as a result of inherent dangers or hazards of overtrading, over stocking, unjustified expansion and diversification which has resulted in business catastrophes and consequently leading to bad debts of the banks.
1.4 SCOPE OF THE STUDY
The limitation of this work is not far fetched fromn the failure of banks in Nigeria and modern system of computer banking increase efficiency, emphasizing little on the geographical locations of banks in Nigeria.
The ability of banks to meet up its current obligation was absolutely questionable and no examined solution has been arrived at solving the problems emanating from this situation. This project work is to highlight the cause of these problems its effects and modern system of solving the problems. The entire research work extended to the hazard act or proactive in the banking sector, similarly, general survey on both old and new generation bank is highly carried out including the prevailing economic situation which was made available for the work. The credibility and accuracy of this findings and conclusion depends mainly on the authenticity of data available or collected and questionnaires schedule of some banks in Nigeria and suggestion with computer system of banking to checkmate the problems.
1.5 STRUCTURE OF THE STUDY
The entire study is systematically arranged in five chapters from chapter which provide the background of the study while chapter two dealt with literature review, followed by the research design of the study. Including chapter four, the data presentation and analysis where hypothesis is highly detailed about
Lastly is the concluding part which constitute findings recommendation, reference, bibliography and appendix.
1.6 STRUCTURAL CHANGES IN BANKS
The financial sector remained under serious pressure in 1995 as the distress in the sector persisted therefore lead to the suspension of granting license to new generation banks. However these assure remained intractable deferring the year significant steps were taken in the task to sanitize the financial sector through a package of comprehensive failure resolution measures but to no avail was the solution.
The withdrawal of the operating license of one more commercial bank as republic bank brought to a total number of banks whose licenses were evolved during the period 1995 to 1996 which the number of licensed banks fell further from 116 to 115 cons
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