The aim of the project is to provide information to the public on the “Effect of Bank failure in Nigeria” it is geared towards bringing to right some of the activities or services rendered by the banking industry, bank failure causes and the effects to it. The project is made up of five chapters.
The first chapter deals with the interaction, this takes about the background information about the evolution of banking system and bank failure.
The second chapter deals with review of related literature in this topic, highlighting different writing opinion concerning bank failure causes and bank depositors it also discusses the roles of banks in Nigeria economic development.
More so, the third chapter deals with the procedure and sources include background information, population and sample, construction of instrument, the statistical method used in the analysis of the various data etc.
The further chapter discusses the data analysis and interpretation. It also specified the responses of the respondents from the various research questions.
Finally, chapter five provides the summary of the whole study, recommendations, conclusions and also area of further research.
TABLE OF CONTENTS
CHAPTER ONE
1.0 Introduction 1
1.1 Statement of Problem 6
1.2 Purpose of Study 7
1.3 Significance of the Study 8
1.4 Statement of Hypotheses 9
1.5 Scope of the Study 9
1.6 Limitations of the Study 10
1.7 Definition of Terms 11
CHAPTER TWO
2.0 Literature Review 13
2.1 Concept of Banking 13
2.2 The Role of Banks in Nigerian Economic Development 14
2.3 Causes of Bank Failure 16
2.4 Effects of Bank Failure 23
2.5 Regulatory Efforts in Meeting the Challenge of Bank Failure26
2.6 Conclusion 29
CHAPTER THREE
3.0 Research Design and Methodology 31
CHAPTER FOUR
4.0 Data Presentation and Analysis 36
CHAPTER FIVE
5.0 Summary of Findings, Conclusion and Recommendation 51
Bibliography 58
Appendix: Questionnaire 61
CHAPTER ONE
1.0 INTRODUCTION
The banking sector plays a lot of vital role in the economy, example, they provide information assistance to individuals and also act as a medium by which cash flow into the individuals hands and the economy, this makes them the back bone of every economy, the banking sector is always watched by the government to ensure its efficiency and to avoid bank failure which might variably or invariably affect the economy, adversely.
Banks failure in Nigeria cannot be said to be strange, as it is to topical issue in Nigeria context, for example the first set of indigenous banks that collapsed in Nigeria can be attributed to existence of too many banks which jeopardized the central banks efficiently and other regulatory bodies in controlling these established banks. The central bank and regulatory bodies being the watch dog to the operations of these banks are ineffective, as the success of these banks would however depend to a greater extent, on the quality of management and the extent to which fraudulent acts are eliminated or controlled.
In recent past, there existed rivals compared with the structure of no competition associated with few exist banks. The governments have introduced a lot of measures to ensure sanity in the banking industries. It is against this background that this carried out to vividly identify the causes of bank failure in Nigeria.
The changes in banking sector has been attributed to resultant changes of the economy.
The origin of banking system revolves around the early London Gold Smith who accepts deposits from people for safe custody. It is on the bases of foresight and prudence of these Gold Smith that paved way for modern banking developed out of the need to serve the colonial masters of those days, there has been modern attempts in developing banking for example between 1914 and 1959 efforts were made to established self owned banks by individuals in order to break the monopoly in banking.
Among the cause of failure in banking was the foreign domination in its establishments, deposit base and credit availability, the bank serves tailored to the need of the expatriates in indigenous bank boom and failures resulting from under capitalization.
The incessant increase of bank failure have been observed, this lead to loss of customers fund and confidence on the banking sector, the activated to ensure safe custody of customers funds, this was why the banking ordinance of 1952 was promulgated, in the ordinance it was stipulated that banks should maintain a minimum of 20% of annual profits in the reserve funds until the balance of the account is equal to the paid up capital of 12,500 for indigenous banks and 100,000 for expatriate banks qualities then for licensing, but the ordinance did not make provisions for assisting banks in distress. Also the central bank as the under of last resort makes no contribution as in financial assistance to distressed banks, this has contributed to inherent collapse of the banking sector. The 1959 ordinance was enacted to supplement deficiencies in the 1952 ordinance, the major achievement of this ordinance was the establishment of central bank of Nigeria (C.B.N), as the apex bank also responsible for licensing banks. The establishment of central bank of Nigeria also mark the existence Nigeria money and capital markets, another important follow – up
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