THE EFFECT OF DISTRESS RESOLUTION OPTIONS ON THE PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA: CASE STUDY OF ANY COMMERCIAL BANK BAILED IN 2009.
ABSTRACT
A descriptive study was made about financial distress and resolution options in some commercial banks using secondary statistics.
This research work designed to describe the financial distress in some Commercial Bank in Nigeria.
The study also took at the follow objective such as; nature and types of financial distress facing some commercial banks, the banks involved are commercial banks bailed in 2009.
It was also discovered that distress is caused is a result of poor management, insolvency, low asset base inadequacy of capital e.t.c.
Therefore, commendation such as: Inadequate, Funding, Increased assets base, provisions for adequate liquidity.
Also such research should be done to other non-financial banking institution and other West African Countries.
CHAPTER ONE
Background of the Study
Statement of Problem
Objective of the Study
Significant of the Study
Delimitation/Limitation of the Study
Delimitation of Terms
CHAPTER TWO
Literature Review
CHAPTER THREE
Research Design/Methodology
Sources of Data, Primary and Secondary Location Data.
CHAPTER FOUR
Summary and findings
CHAPTER FIVE
Recommendation
Conclusion
Biography
PROPOSAL
The basic objective situation under this study was the valuation of financial distress in some commercial banks reasons, issues the consequences and solution. It also deals deeply on the resolution options of the distress.
This study has been structured into five (5) Chapters to make for easy reading and understanding
Chapter One dealt with the background of the study, the statement of problem, the objective of the study, the research questions, the scope of study, the limitation if study, the significance, rational, definition of terms and assumption of the study base on the country’s economy.
It also gives an insight into the causes of financial distress in Commercial banks and other Financial Institution.
From this, other four Chapters deserved that base from the chapter one in order to confirm the managing of distress in Nigerian Banks, the assessment of tackling financial distress, measure laxtant of distress in Nigeria. More also the sources of data and its limitation and findings.
In view of the findings above, recommendations have been made to help tackle the financial distress in some Commercial Banks in Nigeria.
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
In Nigerian Banking system considering the last decade, the Commercial Banking system which is worthy of praise had undergone a rapid expansion both in terms of the number of Institution and the scope of financial services rendered.
As banks were increasingly liberalized, so was the scare of instability sown in these banking system at the sometime.
As these expansion trend contined, a sign of lacked vision among the investors and the direct motive of quick return to satisfy liquidity operation emerged.. The word distress had been in existence but increased promptly as these institution increased due to acute shortage of resources and the massive withdrawal of deposits by government agencies and other public sectors from these banks.
The development trend in the financial structure, exposed and undermine the economic system which impact development of the economy. Therefore, distress places a great burden on regulation authority. Depression in the economy undermine the payment system and discourage savings.
1.2 STATEMENT OF THE PROBLEM
Some Commercial banks have been divided to assist in loans and advance to various sectors of the economy.
And the Commercial banking is known as retail banking which accept deposit and makes payment to his customers.
But the financial condition of some of these Commercial Banking due to the political instablility campaign that was on. Political analyst describes the allocation to be one of the brutal crises that was to come. Therefore, there was price withdrawal of fund by these bank customers. These Institutes is now bogged down by distress, insolvency, poor liquidity due to deadline in deposit and the confidence. The crisis has been averted and the urgency prompted the study. This research work is disquiet to describe the financial distress in some Commercial Banking System in Nigeria.
1.3 OBJECTIVE OF THE STUDY
The objective of the study are:
- To describe the nature and types of financial distress.
- To identify some of the Commercial Banks involved in the distress in Nigeria in 2009.
- To identify the causes of financial distress in these Commercial Banks.
- To determine the level of distress in these Commercial Banks.
- To find out if the distress is caused by poor management.
- To identify possible distress resolution options that could be used in commercial banks in Nigeria
- To identify the effects of such options on the profitability of some commercial banks in Nigeria
1.4 SIGNIFICANCE OF THE STUDY
The importance of a healthy banking system cannot be over emphasized for so many reasons, ranging from the vital economic importance of the long deposit at state to public confidence jobs and career of people and the key role these banks play in economic development.
Also the benefit of finding solution of how to get a solution of the crisis will be found useful to invest by customers of these banks, the regulatory and supervisory authority and even the Government. The solution will also be useful to the managers in general of these banks.
1.5 LIMITATION OF THE STUDY
The study is limited within some banks due to insufficient time to carry out the work.
Apart from these factors, the inability of accessing all distressed Commercial Banks also caused the limitation e.t.c.
Other possible limitation to the study could be lack of transparency among the distressed banks to the researchers to avoid exposing their image.
1.6 DEDICATION OF TERMS DISTESS.
As been defined by Hornby, it is the state of backing in difficult and needing help Smith and Wall 199:Ologun, 1994 defined distress as “Unhealthy”, Situation” or a state of inability or weakness which prevent the achievement of set goal and objective
1.7 FINANCIAL DISTRESS
This is when Financial Institute can no longer cope with their financial structure and require help. This could take various firms like, Insolvence, Poor Management, Illiquidity, Lack of deposits. e.t.c.
1.8 COMMERCIAL BANK
These are Financial Institutions referred to as retail banks. They accept and make payments on demand to their customers.
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