THE ROLE OF COMMERCIAL BANKS IN FINANCING SMALL SCALE INDUSTRIES IN NIGERIA (A CASE STUDY OF UNION BANK OF NIGERIA PLC)
ABSTRACT
The topic of dissertation is The Role Of Commercial Banks In Financial Small Scale Industry In Nigeria. A case study of union bank of Nigeria plc.
The major objective of the study is to ascertain the extent to which union bank of Nigeria plc has helped to financial small scale industries/.
Instrument of data collection is questionnaires and research questions which formed the source of primary data, while materials from various published articles, textbooks, journals and newspaper formed the secondary data.
The method of analysis is the use of tables, percentages and chi-square .
The major finding of the research is that union bank of Nigeria plc has helped to financial small scale industries period under review.
The recommendation based on the finding is that in order to reduce the risk in small scale industry lending, the central bank of Nigeria and the government can do more than they are doing currently scheme.
The study concluded that if the desired objective of using small scale industries as catalysts of development is to be achieved than the role of commercial banks should be mutually supportive.
TABLE OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE
INTRODUTION ANALYSIS
1.1 Background to the problem
1.2 Problem statement
1.3 Objectives of the study
1.4 Research questions
1.5 Research hypothesis
1.6 Scope of study
1.7 Limitations of the study
1.8 Definition of study
Reference
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
2.2 Meaning of small scale industry
2.3 Government policy
2.4 Support systems
2.5 Financing
2.6 Monetary policy development in favour of small scale industries
2.7 Benefits of small scale industry
2.8 Problems facing small scale industry
2.9.1 Financing the project
2.9.2 Technical knows how
2.9.3 Personnel, matters and general administration
2.10 Improving funding small scale industries
References
CHAPTER THREE:
RESEARCH METHODOLGY
3.0 Introduction of the study
3.1 Research design
3.2 Area of study
3.3 Population of study
3.4 Sample size determination
3.5 Instrument for data collection
3.6 Validation of the instrument
3.7 Reliability of the instrument
3.8 Method of data collection
3.9 Data analytical techniques
CHAPTER FOUR:
PRESENTATION AND ANALYSIS OF DATA
4.1 Presentation of data
4.2 Hypothesis testing
CHAPTER FIVE FINDINS:
CONCLUSIONS AND RECOMMENDATIONS
5.1 Findings
5.2 Conclusion
5.3 Recommendation
Bibliography
Appendices
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO PROBLEM
The successive development plans of Nigeria have laid emphasis on the attainment of self reliance. The need for this national objective is because much is expected from individuals from the view point of providing employment opportunities self reliance in basic food and material production high per capital income, foreign exchange earnings and the production of industrial raw materials.
Okporobie (1989:10) observes that Nigeria small scale industries continued to decline despite the so called priority given to the sector
However, the discovery by the central bank that this policy was not enough by it self led to the central bank request with effect from 1970/80 that all commercial bank must reserve a proportion of the minimum credit allocation to indigenous borrowers for small scale Nigeria enterprises. The target prescribed in 1979 was ten percent (10%) which subsequently raised to sixteen percent (16%).
Even though available data showed that performance of commercial banks against this directive has been disappointing. The central bank intends to spare no effort in ensuring that banks fully couple without compromising the smooth functioning of the nation banning system.
He observed also, that without the development of small scale industries in Nigeria, the nations quest for industrialization will certainly remain forever at stake. It is the opinion of the researcher that future development in our industrialization must address the basic issues of creating linkages without the economy to begin to produce real inputs to our manufacturing activities .
Priority attention must therefore be given to these industries for which domestic inputs could easily be produced. This will bring about agro-allied industries like food processing and other by-products.
The objective should be to maximize the value added in their processing and manufacturing as final goods immediately inputs.
Nzewi and Oze (1985:56) observed that empirical evidence indicates that strong producer incentives to small scale industrialists are necessary not also only to meet the food requirement but also to provide growing input supplies and demand as a foundation for sustained industrial growth.
The present economic constraint may well turn out to be a blessing in disguise to our industrialization effect particularly for dynamic manufacturing sector. For instance, the market determinate exchange rate through seeing with its result and high cost of imported inputs may serve as an impetus for industrialist to intensify their search for local substitutes.
Ekenyong and Nyong (1992) observed that small scale enterprises are regarded an organic part of a viable structure for the attainment meaningful economy development in developing economic like Nigeria.
They are significantly more cost effective in bringing about development than large enterprises because of the perceived linkage and multiplier effects which small scale enterprises have on the performance of the economy and economic growth in general.
Osayameh (1989) observes that the strength that make small scale enterprises more amendable for assistance areas as follows.
1. Personal commitment of the proprietor whose life savings usually form the start up capital.
2. Low initial capital out lay requirement
3. Ease of entry and exit and prevalence of just minimal legal constraints
4. Amenability to business advisory services because of their small size which makes than more responsive to improvement suggestions.
Olashore (1987) Observes that the four main sources of enterprises financing open to small scale industry in Nigeria are.
i. Formal financial institutions such as commercial banks merchant banks, insurance companies and the development bank.
ii. Informal financial landlords, credit and savings associations “esus” friends and relations personal savings and .
iii. Other financial scheme, NERFUND NEXIM
in 2001, there was an introduction of small and medium industries equity investment scheme (SMIEIS) in which N359 million was set aside to date by banks under small medium industries equity investment scheme.
Through union bank small and medium scale enterprises (SMES) department, the bank has remain ed in fore front of SMES financing nations was extended to the SMES as at 31st March 2004.
Small scale industry is any industry not exceeding N750,000 including working capital but excluding cost of land.
It is also defined by center for industrial research and development of Obafemi Awolowo university Ile Ife as those industries whose total assets in plant, equipment and working capital do not exceed N250,000 with not more than 50 employees.
1.2 STATEMENT OF THE PROBLEM
The problem of credit to small scale industries may not necessarily be as a result of financing insufficiency but rather for some other reasons among which are.
i. Insufficient preparation on the part of small scale entrepreneurs in their request for credit assistance.
ii. Information gaps as to range of funding institutions and scope of services available in these institution
iii. Moreover, servicing of small business accounts is relatively experience, risky and difficult to monitor with low turn over of account.
However, the parishioners in the sector small scale industry do not display competence in preparing justification for their project. It is are to see most of them coming up with cash flow projections, projected balance sheets, among others. They are based on personal rudimentary in formation and speculation. At times when they seek the advice of consultants, the outcome that are made figures project based on assumptions which are most of their time unrealistic.
As a result such proposals are out rightly rejected by banks.
There are suitable when credit demands in this sector are not in compliance in this government monetary policy and credit guidelines which must be adhered to by banks.
The researcher identifies these problem and considers it necessary to carry our study on them.
1.3 OBJECTIVES OF THE STUDY
The objectives of the study include:
a. To ascertain the extent to which the union bank of Nigeria plc has helped to finance small scale industries.
b. To identify the problems encountered by small scale industrialists in obtaining finance from union bank of Nigeria plc.
c. To evaluate various measures introduced to boost industrial production and its financing and how this has affected realization of the set goals.
d. To determine the causing changes in small scale industrial financing by union bank of Nigeria plc.
e. To make suggestion and recommendations based on the data generated by the study.
1.4 RESEARCH QUESTIONS
The critical appraisal to give answers to the following questions.
a. To what extent has union bank of Nigeria plc helped to finance small scale industries?
b. What are the problems encountered by the small scale industrialists in obtaining finance from union bank if Nigeria plc?
c. What are the various measures introduced to boost industrial production and its financing and how this has affected the realization of the set goals?
d. What are the causes of changes in small scale industrial financing by union bank of Nigeria plc?
e. Does any linear relationship exist between lending to small scale industries and economic recovery and self reliance on the economy?
1.5 RESEARCH HYPOTHESIS
a. There is no linear relationship between lending to small scale industries and economic recovery and self-reliance of the economy.
b. there is no relationship between union bank of Nigeria plc lending to small scale industries and the attitude of this customers
1.6 SCOPE OF STUDY
The scope of the study is the role of commercial banks in financing small scale industries in Nigeria. A case study of union bank of Nigeria plc. It does not cover the role of commercial banks in financing medium and large scale industries.
1.8 LIMITATION OF STUDY
However, there wee constraint imposed on the researcher this includes the following.
a. Time a study of this nature, needs a relatively long time during which information for accurate or at least near accurate inferences could be drawn. The period of the study was short, hence time posed as a constraint to the researcher.
b. Cost: The researcher would have extent the survey to areas. But limitations here included cost of transportation to source for materials and cost of type setting the already completed work.
c. Dearth (Scarcity) of statistical data:
lack of statistical data from our financial institutions like central bank of Nigeria (CBN) ministry of financial and economic development, commercial and merchant bank posed a constraints.
Commercial banks adhere strictly to the rule of secret, in banking thus they refused to released information.
1.8 SIGNIFICANCE OF THE STUDY
This study will highlight problems associated with the role of commercial banks in financing small scale industry in Nigeria.
It will give information on the possible areas for improvement.
Furthermore, the study will help commercial banks to assess and appraisal their role in financing small scale industry in Nigeria.
Moreover, suggestions and recommendations made in this paper will help policy makers formulate new economic policies maintain or modify the existing one.
It will equally serve as a guideline to researchers who may wish too decide with this study in the future.
It will also help small scale entrepreneurs to make sufficient preparation in their request for credit assistance.
It will guide the entrepreneurs in making credits demands that are compliance with government monetary policy.
The last but not the least it will help the entrepreneurs to displayed competence in preparing justification for their project. It is rear to see most of them coming up with cash projections, projected balance sheets.
1.9 DEFINITION OF TERMS
Small-scale industry:
Any industry with capital not exceeding N750,000 including capital but excluding cost of land.
It is also defined by center for industrial research and development of Obafemi Awolowo University Ile Ife as those industries whose total assess in plant equipment and working capital do not exceed N250,000 with not more than 50 employees.
2. COMMERCIAL BANK
a financial institution that acquires deposit from savings surplus unit and give out loans to savings deficit units.
3. INDUSTRIAL DEVELOPMENT CENTER:
Provide management, technical, consultancy and extension services for the small scale.
4. INDIGENISATION DECREE:
A decree that stipulates that most business become, at least 60 percent owned by Nigerians.
5. SOLE PROPRIETORSHIP:
Is a business owned and conducted by one person presumably assisted by one or more persons for intakes wife and children.
SS/CS small scale industry credit scheme.
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Tags: THE ROLE OF COMMERCIAL BANKS IN FINANCING SMALL SCALE INDUSTRIES IN NIGERIA (A CASE STUDY OF UNION BANK OF NIGERIA PLC)
CHAPTER ONE
INTRODUCTION
Background of Study
The central bank of Nigeria CBN was establishing by the central bank of Nigeria act of 1958 and commences operations on the 1st of July 1959.
The principal objectives of the central bank of Nigeria was basically on the issuance of legal tender currency in Nigeria and the central bank of Nigeria is also saddle with the responsibility of maintaining the nations external reserve and value of the legal tender currency in other to safeguard the international value of the nation’s currency.
Some of the functions of the central bank of Nigeria also include promoting monetary stability and a sound financial system. They also serve as the banker and the financial adviser to the federal government on economy decisions. The CBN also serve as bankers to other banks within Nigeria and abroad.
The central bank of Nigeria play a major role in the development of Nigeria economy, the bank has been saddle with various responsibilities to ensure economy development.
The CBN has played a major role in the development of agriculture in the country through the Agricultural Credit Guaranty scheme Fund (ACGSF). The scheme was established by decree no. 20 of 1977, and started operation in April, 1978. Its original share capital and paid-up capital were one hundred million naira and eighty six million and six hundred thousand naira respectively. The federal government of Nigeria holds 60% and the central bank of Nigeria 40% of the shares. The capital based of the scheme was increase to three billion naira in March 2001. The funds guarantees credit fertilities to farmers. The fund is solely managed by the central bank of Nigeria which handles the day to day activities of the scheme.
The central bank of Nigeria has also play a vital role in the development of small and medium enterprises trough the establishment of the small and medium enterprise equity investment scheme. The scheme is a voluntary initiative of the bankers committee approved at its 26th meeting held on the 21st of December 1999. The initiative was in responsive of the federal government concerns and policy measures for the promotion of small and medium enterprises (SMEs) as vehicle for
rapid industrialization, sustainable economy development, poverty alleviation and employment generation.
The scheme require all bank in Nigeria to set aside ten (10) percent of their profit after tax for equity investment and promotion of small and medium scale enterprises. The ten (10) percent of the profit after tax to be set aside annually shall be invested in small and medium scale enterprises as the banking industry contribution to the government effort towards stimulating economy growth, developing local technology and generating employment. The central bank is saddle with the responsibility of ensuring absolute compliance of the banks towards the successful realization of the scheme.
The central bank of Nigeria established the infrastructure finance office on March 01 2010. The mandate of the office is to among others; evolve a sustainable financing frame work to stimulate long-term financing for infrastructural development in the country. The bank has undertaken some steps to improve the sectors as follows;
The bank provided three hundred billion fertility for investment in debentures to be issued by the bank of industry in accordance with section 31 of the CBN act 2007, for investment in power and aviation projects. As part of measures by the CBN to further encourage banks to lend to the real sector of the economy, particularly SMEs, infrastructural and agriculture, the board of directors of the bank has approved the amendment of the prudential guidelines on loan loss provisioning and rule and regulations on margin lending.
We can’t talk about the role the central bank of Nigeria has played on the Nigeria economy without mentioning the impact the CBN bank consolidation. The central bank recent reform (consolidation) that employed certain measure to strengthen the Nigeria banking system by drastically increasing the minimum capital requirement from two million naira to twenty-five billion naira. Through review of policy documents official report and economic information on the banking sector, it became evident the consolidation of banks led to a remarkable reduction of banks from 89 to 25 by merge, acquisition, initial public offer and other means. The bank consolidation has resulted in making banks more efficient and reliable and also, their intermediary potentials have also been revised.
Statement of Problem
The central bank of Nigeria must ensure its streamline the number of project in its entire department in other to ensure adequate funding of those projects. Funding of major project could serve as a limitation to the central bank in actualizing the implementations of it various projects that are expected to enhance the Nigeria economy.
Corruption as we all know is the order of the day in Nigeria, so, for the successful management of funds the central bank must makes sure it does not allow corrupt persons into its system of operations.
The activities of the central bank must not be politicized in any way in other to ensure equity in the disbursement of funds and in taking on special project across the six geo-political zones of the country.
Purpose of Study
The central bank on Nigeria must adhere to it policies in other to enhance economy growth in Nigeria and also in the banking and financial sector of the nation’s economy.
Hence, the fundamental purpose of this study is:
To access the impact of the central bank on the banking industry
To examine the impact of the central bank of the nation’s economy
To identify the benefit of the central bank so far.
To identify the effect of the central bank and other financial institution in sustaining the Nigeria economy
Research Questions
This study attempt to provide answers to the following research questions:
How do you view the central bank in relation to economic development?
Do you think the central bank policy on the Nigeria economy has had any impact on the economy?
Has there been any improvement in the country economy ever since the central bank was created
Are the Nigeria banks strong and trusted enough in spite of the CBN policy on consolidation?
In your own view do you think the central bank has affected the nation’s economy positively or negatively?
How would you rate the impact of the central bank on the manufacturing sector of the economy?
How does the attitude of Nigerians affect the policies of the central bank?
Hypothesis
Looking at the main purpose of this research, it will be reasonable to propose that:
1) Ho: the state of the Nigeria economy has not improve since the establishment of the central bank
Hi: the state of the Nigeria economy has improve since the establishment of the central bank
11) Ho: the central bank is not strong and trusted enough to fully implement all its proposed economy policies.
Ho: the central bank is strong and trusted enough to fully implement all its proposed economy policies.
Significance of Study
The significance of this study is to add to the general body of knowledge, enlighten the general public on the following:
The impact of central bank on the Nigeria economy
The impact of the central bank in reducing the poverty level of the nation’s economy
To bring to light the activities of the central bank in general.
To show to investors and the general public that the state of banks has undergone a lot of changes through the consolation policy of the central bank.
Limitation of study
This research works is basically on the impact of central bank in the development of Nigeria economy. The study will concentrate and will not go beyond the showing the impact of the central bank on the Nigeria economy.
TABLE OF CONTENT:
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Research Problem
1.3 Objectives of the Study
1.4 Significance of the Study
1.5 Research Questions
1.6 Research Hypothesis
1.7 Conceptual and Operational Definition
1.8 Assumptions
1.9 Limitations of the Study
CHAPTER TWO
LITERATURE REVIEW
2.1 Sources of Literature
2.2 The Review
2.3 Summary of Literature Review
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Method
3.2 Research Design
3.3 Research Sample
3.4 Measuring Instrument
3.5 Data Collection
3.6 Data Analysis
3.7 Expected Result
CHAPTER FOUR
DATA ANALYSIS AND RESULTS
4.1 Data Analysis
4.2 Results
4.3 Discussion
CHAPTER FIVE
SUMMARY AND RECOMMENDATIONS
5.1 Summary
5.2 Recommendations for Further Study
Bibliography
HOW TO GET THE FULL PROJECT WORK
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HOW TO RECEIVE PROJECT MATERIAL(S)
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08139462710 or 08137701720
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(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
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No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
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www.easyprojectsolutions.com
www.worldofnolimit.com
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Tags: THE IMPACT OF CENTRAL BANK IN THE DEVELOPMENT OF THE NIGERIA ECONOMY
CHAPTER ONE
INTRODUCTION
Background of Study
The central bank of Nigeria CBN was establishing by the central bank of Nigeria act of 1958 and commences operations on the 1st of July 1959.
The principal objectives of the central bank of Nigeria was basically on the issuance of legal tender currency in Nigeria and the central bank of Nigeria is also saddle with the responsibility of maintaining the nations external reserve and value of the legal tender currency in other to safeguard the international value of the nation’s currency.
Some of the functions of the central bank of Nigeria also include promoting monetary stability and a sound financial system. They also serve as the banker and the financial adviser to the federal government on economy decisions. The CBN also serve as bankers to other banks within Nigeria and abroad.
The central bank of Nigeria play a major role in the development of Nigeria economy, the bank has been saddle with various responsibilities to ensure economy development.
The CBN has played a major role in the development of agriculture in the country through the Agricultural Credit Guaranty scheme Fund (ACGSF). The scheme was established by decree no. 20 of 1977, and started operation in April, 1978. Its original share capital and paid-up capital were one hundred million naira and eighty six million and six hundred thousand naira respectively. The federal government of Nigeria holds 60% and the central bank of Nigeria 40% of the shares. The capital based of the scheme was increase to three billion naira in March 2001. The funds guarantees credit fertilities to farmers. The fund is solely managed by the central bank of Nigeria which handles the day to day activities of the scheme.
The central bank of Nigeria has also play a vital role in the development of small and medium enterprises trough the establishment of the small and medium enterprise equity investment scheme. The scheme is a voluntary initiative of the bankers committee approved at its 26th meeting held on the 21st of December 1999. The initiative was in responsive of the federal government concerns and policy measures for the promotion of small and medium enterprises (SMEs) as vehicle for
rapid industrialization, sustainable economy development, poverty alleviation and employment generation.
The scheme require all bank in Nigeria to set aside ten (10) percent of their profit after tax for equity investment and promotion of small and medium scale enterprises. The ten (10) percent of the profit after tax to be set aside annually shall be invested in small and medium scale enterprises as the banking industry contribution to the government effort towards stimulating economy growth, developing local technology and generating employment. The central bank is saddle with the responsibility of ensuring absolute compliance of the banks towards the successful realization of the scheme.
The central bank of Nigeria established the infrastructure finance office on March 01 2010. The mandate of the office is to among others; evolve a sustainable financing frame work to stimulate long-term financing for infrastructural development in the country. The bank has undertaken some steps to improve the sectors as follows;
The bank provided three hundred billion fertility for investment in debentures to be issued by the bank of industry in accordance with section 31 of the CBN act 2007, for investment in power and aviation projects. As part of measures by the CBN to further encourage banks to lend to the real sector of the economy, particularly SMEs, infrastructural and agriculture, the board of directors of the bank has approved the amendment of the prudential guidelines on loan loss provisioning and rule and regulations on margin lending.
We can’t talk about the role the central bank of Nigeria has played on the Nigeria economy without mentioning the impact the CBN bank consolidation. The central bank recent reform (consolidation) that employed certain measure to strengthen the Nigeria banking system by drastically increasing the minimum capital requirement from two million naira to twenty-five billion naira. Through review of policy documents official report and economic information on the banking sector, it became evident the consolidation of banks led to a remarkable reduction of banks from 89 to 25 by merge, acquisition, initial public offer and other means. The bank consolidation has resulted in making banks more efficient and reliable and also, their intermediary potentials have also been revised.
Statement of Problem
The central bank of Nigeria must ensure its streamline the number of project in its entire department in other to ensure adequate funding of those projects. Funding of major project could serve as a limitation to the central bank in actualizing the implementations of it various projects that are expected to enhance the Nigeria economy.
Corruption as we all know is the order of the day in Nigeria, so, for the successful management of funds the central bank must makes sure it does not allow corrupt persons into its system of operations.
The activities of the central bank must not be politicized in any way in other to ensure equity in the disbursement of funds and in taking on special project across the six geo-political zones of the country.
Purpose of Study
The central bank on Nigeria must adhere to it policies in other to enhance economy growth in Nigeria and also in the banking and financial sector of the nation’s economy.
Hence, the fundamental purpose of this study is:
To access the impact of the central bank on the banking industry
To examine the impact of the central bank of the nation’s economy
To identify the benefit of the central bank so far.
To identify the effect of the central bank and other financial institution in sustaining the Nigeria economy
Research Questions
This study attempt to provide answers to the following research questions:
How do you view the central bank in relation to economic development?
Do you think the central bank policy on the Nigeria economy has had any impact on the economy?
Has there been any improvement in the country economy ever since the central bank was created
Are the Nigeria banks strong and trusted enough in spite of the CBN policy on consolidation?
In your own view do you think the central bank has affected the nation’s economy positively or negatively?
How would you rate the impact of the central bank on the manufacturing sector of the economy?
How does the attitude of Nigerians affect the policies of the central bank?
Hypothesis
Looking at the main purpose of this research, it will be reasonable to propose that:
1) Ho: the state of the Nigeria economy has not improve since the establishment of the central bank
Hi: the state of the Nigeria economy has improve since the establishment of the central bank
11) Ho: the central bank is not strong and trusted enough to fully implement all its proposed economy policies.
Ho: the central bank is strong and trusted enough to fully implement all its proposed economy policies.
Significance of Study
The significance of this study is to add to the general body of knowledge, enlighten the general public on the following:
The impact of central bank on the Nigeria economy
The impact of the central bank in reducing the poverty level of the nation’s economy
To bring to light the activities of the central bank in general.
To show to investors and the general public that the state of banks has undergone a lot of changes through the consolation policy of the central bank.
Limitation of study
This research works is basically on the impact of central bank in the development of Nigeria economy. The study will concentrate and will not go beyond the showing the impact of the central bank on the Nigeria economy.
TABLE OF CONTENT:
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Research Problem
1.3 Objectives of the Study
1.4 Significance of the Study
1.5 Research Questions
1.6 Research Hypothesis
1.7 Conceptual and Operational Definition
1.8 Assumptions
1.9 Limitations of the Study
CHAPTER TWO
LITERATURE REVIEW
2.1 Sources of Literature
2.2 The Review
2.3 Summary of Literature Review
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Method
3.2 Research Design
3.3 Research Sample
3.4 Measuring Instrument
3.5 Data Collection
3.6 Data Analysis
3.7 Expected Result
CHAPTER FOUR
DATA ANALYSIS AND RESULTS
4.1 Data Analysis
4.2 Results
4.3 Discussion
CHAPTER FIVE
SUMMARY AND RECOMMENDATIONS
5.1 Summary
5.2 Recommendations for Further Study
Bibliography
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#10000) into our bank Account below, send the following information to
08139462710 or 08137701720
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.
But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.
Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.
No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
www.easyprojectmaterial.net.ng
www.easyprojectsolutions.com
www.worldofnolimit.com
www.worldofnolimit.com
Tags: THE IMPACT OF CENTRAL BANK IN THE DEVELOPMENT OF THE NIGERIA ECONOMY
CHAPTER ONE
INTRODUCTION
Background of Study
The central bank of Nigeria CBN was establishing by the central bank of Nigeria act of 1958 and commences operations on the 1st of July 1959.
The principal objectives of the central bank of Nigeria was basically on the issuance of legal tender currency in Nigeria and the central bank of Nigeria is also saddle with the responsibility of maintaining the nations external reserve and value of the legal tender currency in other to safeguard the international value of the nation’s currency.
Some of the functions of the central bank of Nigeria also include promoting monetary stability and a sound financial system. They also serve as the banker and the financial adviser to the federal government on economy decisions. The CBN also serve as bankers to other banks within Nigeria and abroad.
The central bank of Nigeria play a major role in the development of Nigeria economy, the bank has been saddle with various responsibilities to ensure economy development.
The CBN has played a major role in the development of agriculture in the country through the Agricultural Credit Guaranty scheme Fund (ACGSF). The scheme was established by decree no. 20 of 1977, and started operation in April, 1978. Its original share capital and paid-up capital were one hundred million naira and eighty six million and six hundred thousand naira respectively. The federal government of Nigeria holds 60% and the central bank of Nigeria 40% of the shares. The capital based of the scheme was increase to three billion naira in March 2001. The funds guarantees credit fertilities to farmers. The fund is solely managed by the central bank of Nigeria which handles the day to day activities of the scheme.
The central bank of Nigeria has also play a vital role in the development of small and medium enterprises trough the establishment of the small and medium enterprise equity investment scheme. The scheme is a voluntary initiative of the bankers committee approved at its 26th meeting held on the 21st of December 1999. The initiative was in responsive of the federal government concerns and policy measures for the promotion of small and medium enterprises (SMEs) as vehicle for
rapid industrialization, sustainable economy development, poverty alleviation and employment generation.
The scheme require all bank in Nigeria to set aside ten (10) percent of their profit after tax for equity investment and promotion of small and medium scale enterprises. The ten (10) percent of the profit after tax to be set aside annually shall be invested in small and medium scale enterprises as the banking industry contribution to the government effort towards stimulating economy growth, developing local technology and generating employment. The central bank is saddle with the responsibility of ensuring absolute compliance of the banks towards the successful realization of the scheme.
The central bank of Nigeria established the infrastructure finance office on March 01 2010. The mandate of the office is to among others; evolve a sustainable financing frame work to stimulate long-term financing for infrastructural development in the country. The bank has undertaken some steps to improve the sectors as follows;
The bank provided three hundred billion fertility for investment in debentures to be issued by the bank of industry in accordance with section 31 of the CBN act 2007, for investment in power and aviation projects. As part of measures by the CBN to further encourage banks to lend to the real sector of the economy, particularly SMEs, infrastructural and agriculture, the board of directors of the bank has approved the amendment of the prudential guidelines on loan loss provisioning and rule and regulations on margin lending.
We can’t talk about the role the central bank of Nigeria has played on the Nigeria economy without mentioning the impact the CBN bank consolidation. The central bank recent reform (consolidation) that employed certain measure to strengthen the Nigeria banking system by drastically increasing the minimum capital requirement from two million naira to twenty-five billion naira. Through review of policy documents official report and economic information on the banking sector, it became evident the consolidation of banks led to a remarkable reduction of banks from 89 to 25 by merge, acquisition, initial public offer and other means. The bank consolidation has resulted in making banks more efficient and reliable and also, their intermediary potentials have also been revised.
Statement of Problem
The central bank of Nigeria must ensure its streamline the number of project in its entire department in other to ensure adequate funding of those projects. Funding of major project could serve as a limitation to the central bank in actualizing the implementations of it various projects that are expected to enhance the Nigeria economy.
Corruption as we all know is the order of the day in Nigeria, so, for the successful management of funds the central bank must makes sure it does not allow corrupt persons into its system of operations.
The activities of the central bank must not be politicized in any way in other to ensure equity in the disbursement of funds and in taking on special project across the six geo-political zones of the country.
Purpose of Study
The central bank on Nigeria must adhere to it policies in other to enhance economy growth in Nigeria and also in the banking and financial sector of the nation’s economy.
Hence, the fundamental purpose of this study is:
To access the impact of the central bank on the banking industry
To examine the impact of the central bank of the nation’s economy
To identify the benefit of the central bank so far.
To identify the effect of the central bank and other financial institution in sustaining the Nigeria economy
Research Questions
This study attempt to provide answers to the following research questions:
How do you view the central bank in relation to economic development?
Do you think the central bank policy on the Nigeria economy has had any impact on the economy?
Has there been any improvement in the country economy ever since the central bank was created
Are the Nigeria banks strong and trusted enough in spite of the CBN policy on consolidation?
In your own view do you think the central bank has affected the nation’s economy positively or negatively?
How would you rate the impact of the central bank on the manufacturing sector of the economy?
How does the attitude of Nigerians affect the policies of the central bank?
Hypothesis
Looking at the main purpose of this research, it will be reasonable to propose that:
1) Ho: the state of the Nigeria economy has not improve since the establishment of the central bank
Hi: the state of the Nigeria economy has improve since the establishment of the central bank
11) Ho: the central bank is not strong and trusted enough to fully implement all its proposed economy policies.
Ho: the central bank is strong and trusted enough to fully implement all its proposed economy policies.
Significance of Study
The significance of this study is to add to the general body of knowledge, enlighten the general public on the following:
The impact of central bank on the Nigeria economy
The impact of the central bank in reducing the poverty level of the nation’s economy
To bring to light the activities of the central bank in general.
To show to investors and the general public that the state of banks has undergone a lot of changes through the consolation policy of the central bank.
Limitation of study
This research works is basically on the impact of central bank in the development of Nigeria economy. The study will concentrate and will not go beyond the showing the impact of the central bank on the Nigeria economy.
TABLE OF CONTENT:
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
1.2 Statement of the Research Problem
1.3 Objectives of the Study
1.4 Significance of the Study
1.5 Research Questions
1.6 Research Hypothesis
1.7 Conceptual and Operational Definition
1.8 Assumptions
1.9 Limitations of the Study
CHAPTER TWO
LITERATURE REVIEW
2.1 Sources of Literature
2.2 The Review
2.3 Summary of Literature Review
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Research Method
3.2 Research Design
3.3 Research Sample
3.4 Measuring Instrument
3.5 Data Collection
3.6 Data Analysis
3.7 Expected Result
CHAPTER FOUR
DATA ANALYSIS AND RESULTS
4.1 Data Analysis
4.2 Results
4.3 Discussion
CHAPTER FIVE
SUMMARY AND RECOMMENDATIONS
5.1 Summary
5.2 Recommendations for Further Study
Bibliography
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#5000) into our bank Account below, send the following information to
08139462710 or 08137701720
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(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.
But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.
Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.
No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
www.easyprojectmaterial.net.ng
www.easyprojectsolutions.com
www.worldofnolimit.com
www.worldofnolimit.com
Tags: THE IMPACT OF CENTRAL BANK IN THE DEVELOPMENT OF THE NIGERIA ECONOMY
ABSTRACT
The prudential guidelines for licensed banks which are based on global banking standards, imposed far-reaching requirements in the classification of risk assets and provision for bad and doubtful debts. Since its introduction in November 1990 the implementation of the guidelines has had a profound impact on the operations of banks.
In this project, the researcher has succeeded in identifying the features of the prudential guidelines as well as its impact on published financial statements of commercial banks in Nigeria.
Published financial statement of the banks for the period of 1990 that is, the inception of prudential guidelines were examined and with that of the period 1994-1998 the prudential guidelines period.
Both primary and secondary sources of data were used in the course of the research.
Two hypothesis were tested using chi-square test.
The research work revealed that:-
(1) The net profit position of commercial banks in Nigeria have been significantly altered since the implementation of the prudential guidelines.
(2) The provision for bad and doubtful debts of commercial banks in Nigeria have significantly increased since the implementation of the prudential guidelines.
The exercise was concluded with suggestion for further study which include:-
(1) further research be conducted to ascertain the impact of the prudential guidelines on the overall activities of all licensed banks in Nigeria.
(2) Further research be carried out on the central bank of Nigeria monitoring implementation measures concerning banks and non-banks financial institutions in Nigeria.
TABLE OF CONTENTS
Title page ii
Dedication iii
Acknowledgement iv
Abstract vi
Table of contents viii
CHAPTER ONE
Introduction 1
1.1 Statement of problem and objective of
the study 1
1.2 Rationale of the study 1
1.3 Significance of the study 2
1.4 Definitions of terms 4
CHAPTER TWO
Review of Related Literature 6
2.1 Theoretical review 6
2.2 Empirical review 17
CHAPTER THREE
Research design and methodology 21
3.1 Hypothesis 21
3.2 Methodology of study 22
3.3 Limitation of study 24
3.4 Sources of data 25
CHAPTER FOUR
4.1 Presentation of data 27
4.2 Analysis of data 32
4.3 Discussion of the result of analysis 42
CHAPTER FIVE
5.1 Summary of the study 44
5.2 Conclusion 45
5.3 Recommendation 47
Bibliography 48
Appendix questionnaire 52
CHAPTER ONE
INTRODUCTION
1.1 STATEMENT OF THE PROBLEM
Before the introduction of the prudential guidelines, according to CBN circular (1990) some banks were used to declaring huge but unrealized profit, otherwise referred to as “paper profit”.
The following problems will be investigated in this study:
(a) Did profit figures of the selected commercial banks decrease significantly post prudential guidelines?
(b) Did provision for bad and doubtful debts increase significantly under prudential guidelines?
1.2 RATIONAL OF THE STUDY
According to Olufun (1991) prudential guidelines seeks to infuse sanity into the chaotic banking industry.
Before the introduction of the guidelines most banks were used to declaring what is known as “paper profit “ and off – balance sheet, engagement ceased to form part of the majority commercial banks balance sheet totals. The guide line will assist banks in improving the assessment of their credit performance as well as providing banks supervisors and auditors with enhanced assessment criteria for adequate capital provision for the protection of the banks. Strict observation of prudential rules by banks contribute towards the efficiency of monetary policy.
1.3 SIGNIFICANCE OF THE STUDY
Obviously some literature exists on the effects of the CBN 1990 prudential guide lines on the financial statement.
However, the need to up-data such information exists and cannot be over emphasized. Therefore this research was undertaken in other to contribute to the existing literature by up-data it as much as possible.
The major significance of this study is aimed at educating the readers on the impact of the CBN guidelines on the financial statement. It was intended to ensure prudence in credit portfolio classification, provisioning for no-performing facilities. It was necessary to have such prudence to ensure reliability in published accounting information and operating results by financial institutions plus some measures of uniformity in credit portfolio disclosures and interest accruals. According to Eghodaghe (1993) it will help the monetary authorities to know how far the guidelines have achieved it’s primary objective reduction in the declaration of paper profits by banks.
This study will assist the commercial bank in coming up with strategies that will enhance their credit portfolio and reduce loan losses and subsequent provision for bad and doubtful debts. Finally it will provide a good reading material for students of banking and finance, management, practicing bankers including other related professionals and will expose other possible areas of research.
1.4 DEFINITION OF TERMS
F B N: First Bank Of Nigeria PLC
U B N: Union Bank of Nigeria PLC
C B N: Central Bank of Nigeria.
PORTFOLIO: According to Odoh (1998) is a list of securities held by and investor. A good portfolio will show a wide spread of investment in order to reduce the risk of loss.
BAD AND DOUBTFUL DEBTS:- It is referred to all non performing credit facilities to reflect such specification in the central bank prudential guidelines.
Monetary Policy:- A policy which deals with discretionary controls of money supply by monetary authorities (Orji 1998).
PRUDENTIAL GUIDELINES: According to Nwankwo (1991).
Prudential guidelines is a body of specific rules or agreed behaviour either imposed by some government or external agency that controls the activities and business of operation of the institutions.
PERFORMING ASSETS: These are those credit on which payment of both principal and interest are up to data in accordance with the agreed repayment terms. (Nigeria Accounting standard Board 1990).
NON-PERFORMING ASSETS:- Credits on which payment of both principal and interest are up to date in accordance with the agreed repayment term.
FINANCIAL STATEMANT:- According to Nigeria Accounting standard Board (1984) is a report which consist of Balance sheet, profit and loss account or income statement, the notes of the account, source and application of funds statement, value added statement and historical financial summary.
PAPER PROFIT :- False profit declaration.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#3000) into our bank Account below, send the following information to
08139462710 or 08137701720
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.
But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.
Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.
No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
www.easyprojectmaterial.net.ng
www.easyprojectsolutions.com
www.worldofnolimit.com
www.worldofnolimit.com
Tags: THE EFFECT OF PRUDENTIAL GUIDELINES ON THE PROFITABILITY OF COMMERCIAL BANKS.
ABSTRACT
The prudential guidelines for licensed banks which are based on global banking standards, imposed far-reaching requirements in the classification of risk assets and provision for bad and doubtful debts. Since its introduction in November 1990 the implementation of the guidelines has had a profound impact on the operations of banks.
In this project, the researcher has succeeded in identifying the features of the prudential guidelines as well as its impact on published financial statements of commercial banks in Nigeria.
Published financial statement of the banks for the period of 1990 that is, the inception of prudential guidelines were examined and with that of the period 1994-1998 the prudential guidelines period.
Both primary and secondary sources of data were used in the course of the research.
Two hypothesis were tested using chi-square test.
The research work revealed that:-
(1) The net profit position of commercial banks in Nigeria have been significantly altered since the implementation of the prudential guidelines.
(2) The provision for bad and doubtful debts of commercial banks in Nigeria have significantly increased since the implementation of the prudential guidelines.
The exercise was concluded with suggestion for further study which include:-
(1) further research be conducted to ascertain the impact of the prudential guidelines on the overall activities of all licensed banks in Nigeria.
(2) Further research be carried out on the central bank of Nigeria monitoring implementation measures concerning banks and non-banks financial institutions in Nigeria.
TABLE OF CONTENTS
Title page ii
Dedication iii
Acknowledgement iv
Abstract vi
Table of contents viii
CHAPTER ONE
Introduction 1
1.1 Statement of problem and objective of
the study 1
1.2 Rationale of the study 1
1.3 Significance of the study 2
1.4 Definitions of terms 4
CHAPTER TWO
Review of Related Literature 6
2.1 Theoretical review 6
2.2 Empirical review 17
CHAPTER THREE
Research design and methodology 21
3.1 Hypothesis 21
3.2 Methodology of study 22
3.3 Limitation of study 24
3.4 Sources of data 25
CHAPTER FOUR
4.1 Presentation of data 27
4.2 Analysis of data 32
4.3 Discussion of the result of analysis 42
CHAPTER FIVE
5.1 Summary of the study 44
5.2 Conclusion 45
5.3 Recommendation 47
Bibliography 48
Appendix questionnaire 52
CHAPTER ONE
INTRODUCTION
1.1 STATEMENT OF THE PROBLEM
Before the introduction of the prudential guidelines, according to CBN circular (1990) some banks were used to declaring huge but unrealized profit, otherwise referred to as “paper profit”.
The following problems will be investigated in this study:
(a) Did profit figures of the selected commercial banks decrease significantly post prudential guidelines?
(b) Did provision for bad and doubtful debts increase significantly under prudential guidelines?
1.2 RATIONAL OF THE STUDY
According to Olufun (1991) prudential guidelines seeks to infuse sanity into the chaotic banking industry.
Before the introduction of the guidelines most banks were used to declaring what is known as “paper profit “ and off – balance sheet, engagement ceased to form part of the majority commercial banks balance sheet totals. The guide line will assist banks in improving the assessment of their credit performance as well as providing banks supervisors and auditors with enhanced assessment criteria for adequate capital provision for the protection of the banks. Strict observation of prudential rules by banks contribute towards the efficiency of monetary policy.
1.3 SIGNIFICANCE OF THE STUDY
Obviously some literature exists on the effects of the CBN 1990 prudential guide lines on the financial statement.
However, the need to up-data such information exists and cannot be over emphasized. Therefore this research was undertaken in other to contribute to the existing literature by up-data it as much as possible.
The major significance of this study is aimed at educating the readers on the impact of the CBN guidelines on the financial statement. It was intended to ensure prudence in credit portfolio classification, provisioning for no-performing facilities. It was necessary to have such prudence to ensure reliability in published accounting information and operating results by financial institutions plus some measures of uniformity in credit portfolio disclosures and interest accruals. According to Eghodaghe (1993) it will help the monetary authorities to know how far the guidelines have achieved it’s primary objective reduction in the declaration of paper profits by banks.
This study will assist the commercial bank in coming up with strategies that will enhance their credit portfolio and reduce loan losses and subsequent provision for bad and doubtful debts. Finally it will provide a good reading material for students of banking and finance, management, practicing bankers including other related professionals and will expose other possible areas of research.
1.4 DEFINITION OF TERMS
F B N: First Bank Of Nigeria PLC
U B N: Union Bank of Nigeria PLC
C B N: Central Bank of Nigeria.
PORTFOLIO: According to Odoh (1998) is a list of securities held by and investor. A good portfolio will show a wide spread of investment in order to reduce the risk of loss.
BAD AND DOUBTFUL DEBTS:- It is referred to all non performing credit facilities to reflect such specification in the central bank prudential guidelines.
Monetary Policy:- A policy which deals with discretionary controls of money supply by monetary authorities (Orji 1998).
PRUDENTIAL GUIDELINES: According to Nwankwo (1991).
Prudential guidelines is a body of specific rules or agreed behaviour either imposed by some government or external agency that controls the activities and business of operation of the institutions.
PERFORMING ASSETS: These are those credit on which payment of both principal and interest are up to data in accordance with the agreed repayment terms. (Nigeria Accounting standard Board 1990).
NON-PERFORMING ASSETS:- Credits on which payment of both principal and interest are up to date in accordance with the agreed repayment term.
FINANCIAL STATEMANT:- According to Nigeria Accounting standard Board (1984) is a report which consist of Balance sheet, profit and loss account or income statement, the notes of the account, source and application of funds statement, value added statement and historical financial summary.
PAPER PROFIT :- False profit declaration.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#10000) into our bank Account below, send the following information to
08139462710 or 08137701720
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.
But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.
Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.
No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
www.easyprojectmaterial.net.ng
www.easyprojectsolutions.com
www.worldofnolimit.com
www.worldofnolimit.com
Tags: THE EFFECT OF PRUDENTIAL GUIDELINES ON THE PROFITABILITY OF COMMERCIAL BANKS.
ABSTRACT
The prudential guidelines for licensed banks which are based on global banking standards, imposed far-reaching requirements in the classification of risk assets and provision for bad and doubtful debts. Since its introduction in November 1990 the implementation of the guidelines has had a profound impact on the operations of banks.
In this project, the researcher has succeeded in identifying the features of the prudential guidelines as well as its impact on published financial statements of commercial banks in Nigeria.
Published financial statement of the banks for the period of 1990 that is, the inception of prudential guidelines were examined and with that of the period 1994-1998 the prudential guidelines period.
Both primary and secondary sources of data were used in the course of the research.
Two hypothesis were tested using chi-square test.
The research work revealed that:-
(1) The net profit position of commercial banks in Nigeria have been significantly altered since the implementation of the prudential guidelines.
(2) The provision for bad and doubtful debts of commercial banks in Nigeria have significantly increased since the implementation of the prudential guidelines.
The exercise was concluded with suggestion for further study which include:-
(1) further research be conducted to ascertain the impact of the prudential guidelines on the overall activities of all licensed banks in Nigeria.
(2) Further research be carried out on the central bank of Nigeria monitoring implementation measures concerning banks and non-banks financial institutions in Nigeria.
TABLE OF CONTENTS
Title page ii
Dedication iii
Acknowledgement iv
Abstract vi
Table of contents viii
CHAPTER ONE
Introduction 1
1.1 Statement of problem and objective of
the study 1
1.2 Rationale of the study 1
1.3 Significance of the study 2
1.4 Definitions of terms 4
CHAPTER TWO
Review of Related Literature 6
2.1 Theoretical review 6
2.2 Empirical review 17
CHAPTER THREE
Research design and methodology 21
3.1 Hypothesis 21
3.2 Methodology of study 22
3.3 Limitation of study 24
3.4 Sources of data 25
CHAPTER FOUR
4.1 Presentation of data 27
4.2 Analysis of data 32
4.3 Discussion of the result of analysis 42
CHAPTER FIVE
5.1 Summary of the study 44
5.2 Conclusion 45
5.3 Recommendation 47
Bibliography 48
Appendix questionnaire 52
CHAPTER ONE
INTRODUCTION
1.1 STATEMENT OF THE PROBLEM
Before the introduction of the prudential guidelines, according to CBN circular (1990) some banks were used to declaring huge but unrealized profit, otherwise referred to as “paper profit”.
The following problems will be investigated in this study:
(a) Did profit figures of the selected commercial banks decrease significantly post prudential guidelines?
(b) Did provision for bad and doubtful debts increase significantly under prudential guidelines?
1.2 RATIONAL OF THE STUDY
According to Olufun (1991) prudential guidelines seeks to infuse sanity into the chaotic banking industry.
Before the introduction of the guidelines most banks were used to declaring what is known as “paper profit “ and off – balance sheet, engagement ceased to form part of the majority commercial banks balance sheet totals. The guide line will assist banks in improving the assessment of their credit performance as well as providing banks supervisors and auditors with enhanced assessment criteria for adequate capital provision for the protection of the banks. Strict observation of prudential rules by banks contribute towards the efficiency of monetary policy.
1.3 SIGNIFICANCE OF THE STUDY
Obviously some literature exists on the effects of the CBN 1990 prudential guide lines on the financial statement.
However, the need to up-data such information exists and cannot be over emphasized. Therefore this research was undertaken in other to contribute to the existing literature by up-data it as much as possible.
The major significance of this study is aimed at educating the readers on the impact of the CBN guidelines on the financial statement. It was intended to ensure prudence in credit portfolio classification, provisioning for no-performing facilities. It was necessary to have such prudence to ensure reliability in published accounting information and operating results by financial institutions plus some measures of uniformity in credit portfolio disclosures and interest accruals. According to Eghodaghe (1993) it will help the monetary authorities to know how far the guidelines have achieved it’s primary objective reduction in the declaration of paper profits by banks.
This study will assist the commercial bank in coming up with strategies that will enhance their credit portfolio and reduce loan losses and subsequent provision for bad and doubtful debts. Finally it will provide a good reading material for students of banking and finance, management, practicing bankers including other related professionals and will expose other possible areas of research.
1.4 DEFINITION OF TERMS
F B N: First Bank Of Nigeria PLC
U B N: Union Bank of Nigeria PLC
C B N: Central Bank of Nigeria.
PORTFOLIO: According to Odoh (1998) is a list of securities held by and investor. A good portfolio will show a wide spread of investment in order to reduce the risk of loss.
BAD AND DOUBTFUL DEBTS:- It is referred to all non performing credit facilities to reflect such specification in the central bank prudential guidelines.
Monetary Policy:- A policy which deals with discretionary controls of money supply by monetary authorities (Orji 1998).
PRUDENTIAL GUIDELINES: According to Nwankwo (1991).
Prudential guidelines is a body of specific rules or agreed behaviour either imposed by some government or external agency that controls the activities and business of operation of the institutions.
PERFORMING ASSETS: These are those credit on which payment of both principal and interest are up to data in accordance with the agreed repayment terms. (Nigeria Accounting standard Board 1990).
NON-PERFORMING ASSETS:- Credits on which payment of both principal and interest are up to date in accordance with the agreed repayment term.
FINANCIAL STATEMANT:- According to Nigeria Accounting standard Board (1984) is a report which consist of Balance sheet, profit and loss account or income statement, the notes of the account, source and application of funds statement, value added statement and historical financial summary.
PAPER PROFIT :- False profit declaration.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#5000) into our bank Account below, send the following information to
08139462710 or 08137701720
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.
But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.
Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.
No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
www.easyprojectmaterial.net.ng
www.easyprojectsolutions.com
www.worldofnolimit.com
www.worldofnolimit.com
Tags: THE EFFECT OF PRUDENTIAL GUIDELINES ON THE PROFITABILITY OF COMMERCIAL BANKS.
ABSTRACT
This work “The effect of distress resolution options on the profitability of commercial banks has the objective of showing the effect of distress resolution options on the profit growth of commercial banks. The causes of bank distress in Nigeria and the possible prevention strategies or resolution options of bank distress. The review of related literature was done to give an in depth knowledge of the topic to the researchers. Both primary and secondary sources of data were used by the researchers.
Simple statistical tools like T-test, least square (B) and tables were used to analyse the data collected. The following findings were made; Banks made lower profit during distress period and higher profit during distress period and higher profit after distress period. Meanwhile, banks generally made lower profit during distress period. We recommended that the supervisory arsenals to ensure minimum distress with little or no effect when it occurs.
TABLE OF CONTENT
Title page ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vi
Table of Content vii
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 5
1.3 Purpose/Objectives of the study 5
1.4 Research Questions 6
1.5 Research Hypothesis 6
1.6 Significance of the Study 7
1.7 Scope, Limitations and Delimitations 7
1.8 Definitions of Terms 8
CHAPTER TWO
2.0 Review of Related Literature 10
2.1 Definition of Distress in Banking Industry 10
2.2 Symptoms of Distressed Banks in Nigeria 14
2.3 Causes of Banking Distress 16
2.3.1 Capital Inadequacy 18
2.3.2 Inept Management 19
2.3.3 Ownership Structure/Political
Interference in Management of Banks 20
2.4 Distress Management and Failure Resolution Option 21
2.5 The Role of Banks in an Economic System 30
Reference 33
CHAPTER THREE
3.0 Research Design and Methodology 35
3.1 Research Design 35
3.2 Area of Study 36
3.3 Population 36
3.4 Sample and Sampling Techniques 37
3.5 Instruments of Data Collection 37
3.6 Methods of Data Presentation 38
3.7 Methods of Data Analysis 38
Reference 40
CHAPTER FOUR
4.0 Data Presentation and Analysis 41
4.1 Graphical Illustration of Banks Profit 43
CHAPTER FIVE
5.0 Findings, Recommendation and Conclusion 54
5.1 Findings 54
5.2 Recommendation 56
5.3 Conclusion 58
Bibliography 59
Appendix 61
PROPOSAL
The topic “The effect of distress resolution options on the profitability of commercial banks in Nigeria.(A case study of selected Commercial banks)
The Topic “The topic The effect of distress resolution options on the profitability of commercial banks in Nigeria” is posed to appraise the effect of distress on the profit growth of commercial banks. It measures the way in which distress affects the profit of commercial banks negatively or otherwise. It also offers resolution options
For effective execution of this work a ten year profit trend of some selected banks will be evaluated. This ten year profit will cover the period of distress and after distress for a proper appraisal of the work.
Meanwhile the profit of these banks will be collected using a primary data source (Annual Report) and secondary sources of information and there primary data will be analysed using the most appropriate statistical tools for an accurate result.
However, there will also be a formulation of hypothesis which is based on the known negative implication of distress. Though, this hypothesis and also there will be a formulation of research questions which will be sample in relative to the objective of the work for the best result.
After all, an inference will be drawn based on the outcome of our statistical test. Based on the results obtained in our tests there will be a recommendation thereof.
The distress in a bank made the banks to have lower profit during distress period and higher profit after distress permit, meanwhile, generally, banks made lower profit during distress period, due to the insufficient cover of losses from the profit generate internally was unable to generate internally positive capital.
The bank or some banks also experience illiquidity or insolvency, this is resulting in a situation whereby the banks could no longer met its liabilities and all there brings about illiquid. These is also insolvent in the bank when the value of its realizable assets is less than the total value of its liabilities.
Furthermore, the inability of a financial institutions to bridge its primary obligation of creating credit and loss of liquidity or the liability of the bank to turn assets into cash to meet any abnormal demand for cash by their customers.
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
In any modern economy, the efficient production and exchange of goods and services requires money and bank is the instrument for affecting it. The last few years have been both traumatic and revolutionary for the banking industry. The industry produced the largest number of technically insolvent and under capitalized banks. The magnitude of distress in the nation’s banking industry reached on unprecedented level making it an issue of concern to the government, the regulatory authority, the bankers and the general public.
The Nigeria banking scene was characterized by changes designed to promote banking in the country. The changes may be categorized into phases, but due to the nature of our work we will consider two phases: namely, the era of laissez-fair banking (1894-1952), the era of limited banking regulator (1952-1958). During the first phase, banking industry was monopolized by foreign banks, principally the African banking corporation which was the precursor of the (BBWA) British Bank for West African the present First Bank of Nigeria the Barclays bank DCO (Dominion Colonial and Overseas) the present day Union banks, and the British an French Bank, the for-runner of the present United Bank for Africa. Although discrimination against Nigerians by these banks led to the establishment of some indigenous banks which unfortunately offers litter or no competition to the foreign banks essentially because of their weak capital base or poor managerial capacity. Consequently, all but three of the indigenous banks failed. The survived includes the National Bank of Nigeria established in 1933, the Agbomagbe Bank (now Wema Bank) established 1945 and the Africa Continental Bank 1947.
A commission of inquiry headed by G.D. patron set up in 1948 to investigate the business of banking in Nigeria. Their report led to the enactment of the first banking legislation in Nigeria, the banking ordinance of 1952. The 1952 ordinance laid down the standard and procedure for the conduct of banking business by prescribing the mandatory minimum capital requirement for banks both expatiates and indigenous banks at the tune of ∑100,000 and ∑12,500 respectively and it also introduced regulations to check bank failure. However, all the indigenous bank established in the country during this period also all failed. The bank failures of this era were attributed largely to the monopolistic structure of the banking industry, which allowed the foreign banks to enjoy exclusive patronage from British firms. The indigenous banks that survived was able to make it because of the support they got from their state government.
The distress phenomenon in Nigeria banking industry is of recent origin. The manifestation became discernable with some policy shocks starting in 1988 with the Central Bank of Nigeria (CBN) directive to banks that naira backing for foreign exchange application be lodged with CBN. Thus was followed in 1989 by another directive requiring public sector deposits to be transferred to CBN. These two directives exposed the precious liquidity position of some banks and the distress they have subterraneous harbored. What was thought to be a temporary liquidity problem for few banks soon caught up with a lot more banks.
It is important to stress in this work that banking system was already in distress by the time NDIC was established. By them, about 7 (seven) banks were known to be technically insolvent. The government at that time, did not embark upon a clearing exercise that would have removed from the system that distressed institutions because it was feared that such an action would lead to loss of public confidence and flight of foreign capital more so there was no deposit insurance institution to expeditiously manage such bank closures. The NDIC was nevertheless required to insure all banks. That means that the corporation has been involved in managing distressed banks even before it could settle down and minister enough resources for this important task.
The intermediating role of banks and their relevance both in the transmission of monetary policies and in the payment system underscore their importance as well as the problem that bank distress at the prevailing dimension in our economy could precipitate. Arising from their intermediation banks generate financial resources ad put these at the disposal of deficit economic growth in the form of increased employment of otherwise idle resources and this in turn leads to increase output. Therefore, an industry wide insolvency of banks, such as the one experienced in Nigeria, should be expected to retard the economy’s rate of capital formation, reduce its level of employment and output, and ultimately the pace of economic growth.
1.2 STATEMENT OF THE PROBLEM
A serious problem posed by widespred distress among banks is the threat to banking habit and the development of an efficient payment mechanism. The loss of confidence, the after math of the distress that hit the banking sector forced several business to take ferver risks by taking back their fund to well established safe havens dominated by older generation banks.
This research wok is therefore concerned with “Evaluating the impact of bank distress on the profit growth existing of commercial banks. Using ( A vase study of selected Commercial banks).
1.3 PURPOSE/OBJECTIVE OF THE STUDY
The main purpose/objective of this study is to have an overview of the effect of bank distress on the profit growth of commercial banks. Investigate into the reasons for bank failure in Nigeria.
Other objectives include:
- To evaluate the causes of bank distress in Nigeria. To find out the impact.
- To find out the possible prevention strategies or failure resolution options of bank distress.
1.4 RESEARCH QUESTIONS
(1) What are the causes of bank distress?
(2) What is the impact of bank distress?
(3) What is the profit growth rate of existing commercial bank during distress.
(4) What are the effects of bank distress?
(5) What are the possible solution options to this phenomenon in the banking scene?
1.5 RESEARCH HYPOTHESIS
H1: Distress has no effect on the average profit of commercial
bank
Ho: Distress has effect on the average profit of commercial
banks.
1.6 SIGNIFICANCE OF THE STUDY
This research project will be of importance of the following persons –
- New generation banks, which may wish to know the implication of banks distress in the banking industry and how to restore the confidence of the customers and uphold efficient payment mechanism.
- Nigeria deposit insurance corporation: The work could be of immense help to NDIC in the area of distress management and prevention strategies. And also in the area of failure resolution option in banking industry.
- Students who may wish to know the extent of distress in the banking industry and the trend of distress as it affect the modern banking will also benefit from this work.
1.8 SCOPE, LIMITATIONS AND DELIMITATIONS:
While the banking impact distress in Nigeria will theoretically serve as the population of study. The project is designed to appraise the impact of bank distress on the profit growth of Union Bank of Nigeria Plc, First Bank of Nigeria, United Bank for Africa and Guarantee Trust Bank. It will also analyse the trend of these banks profit within a period of 10 years (1992-2001).
1.8 DEFINITION OF TERMS
What is Distress? It can be defined as an extreme suffering caused by lack of money or a state of danger, calamity and misfortunate acute poverty.
What is an Evaluation? This can also be defined as form of idea or judgment of something and also to work out something in numerical value.
What is Impact? This can be define as a strong effect or impression to bank. It is also a situation whereby something will be to be press closely or firmly together.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#3000) into our bank Account below, send the following information to
08139462710 or 08137701720
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.
But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.
Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.
No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
www.easyprojectmaterial.net.ng
www.easyprojectsolutions.com
www.worldofnolimit.com
www.worldofnolimit.com
Tags: THE EFFECT DISTRESS RESOLUTION OPTIONS ON THE PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA (A CASE STUDY OF SELECTED COMMERCIAL BANKS)
ABSTRACT
This work “The effect of distress resolution options on the profitability of commercial banks has the objective of showing the effect of distress resolution options on the profit growth of commercial banks. The causes of bank distress in Nigeria and the possible prevention strategies or resolution options of bank distress. The review of related literature was done to give an in depth knowledge of the topic to the researchers. Both primary and secondary sources of data were used by the researchers.
Simple statistical tools like T-test, least square (B) and tables were used to analyse the data collected. The following findings were made; Banks made lower profit during distress period and higher profit during distress period and higher profit after distress period. Meanwhile, banks generally made lower profit during distress period. We recommended that the supervisory arsenals to ensure minimum distress with little or no effect when it occurs.
TABLE OF CONTENT
Title page ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vi
Table of Content vii
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 5
1.3 Purpose/Objectives of the study 5
1.4 Research Questions 6
1.5 Research Hypothesis 6
1.6 Significance of the Study 7
1.7 Scope, Limitations and Delimitations 7
1.8 Definitions of Terms 8
CHAPTER TWO
2.0 Review of Related Literature 10
2.1 Definition of Distress in Banking Industry 10
2.2 Symptoms of Distressed Banks in Nigeria 14
2.3 Causes of Banking Distress 16
2.3.1 Capital Inadequacy 18
2.3.2 Inept Management 19
2.3.3 Ownership Structure/Political
Interference in Management of Banks 20
2.4 Distress Management and Failure Resolution Option 21
2.5 The Role of Banks in an Economic System 30
Reference 33
CHAPTER THREE
3.0 Research Design and Methodology 35
3.1 Research Design 35
3.2 Area of Study 36
3.3 Population 36
3.4 Sample and Sampling Techniques 37
3.5 Instruments of Data Collection 37
3.6 Methods of Data Presentation 38
3.7 Methods of Data Analysis 38
Reference 40
CHAPTER FOUR
4.0 Data Presentation and Analysis 41
4.1 Graphical Illustration of Banks Profit 43
CHAPTER FIVE
5.0 Findings, Recommendation and Conclusion 54
5.1 Findings 54
5.2 Recommendation 56
5.3 Conclusion 58
Bibliography 59
Appendix 61
PROPOSAL
The topic “The effect of distress resolution options on the profitability of commercial banks in Nigeria.(A case study of selected Commercial banks)
The Topic “The topic The effect of distress resolution options on the profitability of commercial banks in Nigeria” is posed to appraise the effect of distress on the profit growth of commercial banks. It measures the way in which distress affects the profit of commercial banks negatively or otherwise. It also offers resolution options
For effective execution of this work a ten year profit trend of some selected banks will be evaluated. This ten year profit will cover the period of distress and after distress for a proper appraisal of the work.
Meanwhile the profit of these banks will be collected using a primary data source (Annual Report) and secondary sources of information and there primary data will be analysed using the most appropriate statistical tools for an accurate result.
However, there will also be a formulation of hypothesis which is based on the known negative implication of distress. Though, this hypothesis and also there will be a formulation of research questions which will be sample in relative to the objective of the work for the best result.
After all, an inference will be drawn based on the outcome of our statistical test. Based on the results obtained in our tests there will be a recommendation thereof.
The distress in a bank made the banks to have lower profit during distress period and higher profit after distress permit, meanwhile, generally, banks made lower profit during distress period, due to the insufficient cover of losses from the profit generate internally was unable to generate internally positive capital.
The bank or some banks also experience illiquidity or insolvency, this is resulting in a situation whereby the banks could no longer met its liabilities and all there brings about illiquid. These is also insolvent in the bank when the value of its realizable assets is less than the total value of its liabilities.
Furthermore, the inability of a financial institutions to bridge its primary obligation of creating credit and loss of liquidity or the liability of the bank to turn assets into cash to meet any abnormal demand for cash by their customers.
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
In any modern economy, the efficient production and exchange of goods and services requires money and bank is the instrument for affecting it. The last few years have been both traumatic and revolutionary for the banking industry. The industry produced the largest number of technically insolvent and under capitalized banks. The magnitude of distress in the nation’s banking industry reached on unprecedented level making it an issue of concern to the government, the regulatory authority, the bankers and the general public.
The Nigeria banking scene was characterized by changes designed to promote banking in the country. The changes may be categorized into phases, but due to the nature of our work we will consider two phases: namely, the era of laissez-fair banking (1894-1952), the era of limited banking regulator (1952-1958). During the first phase, banking industry was monopolized by foreign banks, principally the African banking corporation which was the precursor of the (BBWA) British Bank for West African the present First Bank of Nigeria the Barclays bank DCO (Dominion Colonial and Overseas) the present day Union banks, and the British an French Bank, the for-runner of the present United Bank for Africa. Although discrimination against Nigerians by these banks led to the establishment of some indigenous banks which unfortunately offers litter or no competition to the foreign banks essentially because of their weak capital base or poor managerial capacity. Consequently, all but three of the indigenous banks failed. The survived includes the National Bank of Nigeria established in 1933, the Agbomagbe Bank (now Wema Bank) established 1945 and the Africa Continental Bank 1947.
A commission of inquiry headed by G.D. patron set up in 1948 to investigate the business of banking in Nigeria. Their report led to the enactment of the first banking legislation in Nigeria, the banking ordinance of 1952. The 1952 ordinance laid down the standard and procedure for the conduct of banking business by prescribing the mandatory minimum capital requirement for banks both expatiates and indigenous banks at the tune of ∑100,000 and ∑12,500 respectively and it also introduced regulations to check bank failure. However, all the indigenous bank established in the country during this period also all failed. The bank failures of this era were attributed largely to the monopolistic structure of the banking industry, which allowed the foreign banks to enjoy exclusive patronage from British firms. The indigenous banks that survived was able to make it because of the support they got from their state government.
The distress phenomenon in Nigeria banking industry is of recent origin. The manifestation became discernable with some policy shocks starting in 1988 with the Central Bank of Nigeria (CBN) directive to banks that naira backing for foreign exchange application be lodged with CBN. Thus was followed in 1989 by another directive requiring public sector deposits to be transferred to CBN. These two directives exposed the precious liquidity position of some banks and the distress they have subterraneous harbored. What was thought to be a temporary liquidity problem for few banks soon caught up with a lot more banks.
It is important to stress in this work that banking system was already in distress by the time NDIC was established. By them, about 7 (seven) banks were known to be technically insolvent. The government at that time, did not embark upon a clearing exercise that would have removed from the system that distressed institutions because it was feared that such an action would lead to loss of public confidence and flight of foreign capital more so there was no deposit insurance institution to expeditiously manage such bank closures. The NDIC was nevertheless required to insure all banks. That means that the corporation has been involved in managing distressed banks even before it could settle down and minister enough resources for this important task.
The intermediating role of banks and their relevance both in the transmission of monetary policies and in the payment system underscore their importance as well as the problem that bank distress at the prevailing dimension in our economy could precipitate. Arising from their intermediation banks generate financial resources ad put these at the disposal of deficit economic growth in the form of increased employment of otherwise idle resources and this in turn leads to increase output. Therefore, an industry wide insolvency of banks, such as the one experienced in Nigeria, should be expected to retard the economy’s rate of capital formation, reduce its level of employment and output, and ultimately the pace of economic growth.
1.2 STATEMENT OF THE PROBLEM
A serious problem posed by widespred distress among banks is the threat to banking habit and the development of an efficient payment mechanism. The loss of confidence, the after math of the distress that hit the banking sector forced several business to take ferver risks by taking back their fund to well established safe havens dominated by older generation banks.
This research wok is therefore concerned with “Evaluating the impact of bank distress on the profit growth existing of commercial banks. Using ( A vase study of selected Commercial banks).
1.3 PURPOSE/OBJECTIVE OF THE STUDY
The main purpose/objective of this study is to have an overview of the effect of bank distress on the profit growth of commercial banks. Investigate into the reasons for bank failure in Nigeria.
Other objectives include:
- To evaluate the causes of bank distress in Nigeria. To find out the impact.
- To find out the possible prevention strategies or failure resolution options of bank distress.
1.4 RESEARCH QUESTIONS
(1) What are the causes of bank distress?
(2) What is the impact of bank distress?
(3) What is the profit growth rate of existing commercial bank during distress.
(4) What are the effects of bank distress?
(5) What are the possible solution options to this phenomenon in the banking scene?
1.5 RESEARCH HYPOTHESIS
H1: Distress has no effect on the average profit of commercial
bank
Ho: Distress has effect on the average profit of commercial
banks.
1.6 SIGNIFICANCE OF THE STUDY
This research project will be of importance of the following persons –
- New generation banks, which may wish to know the implication of banks distress in the banking industry and how to restore the confidence of the customers and uphold efficient payment mechanism.
- Nigeria deposit insurance corporation: The work could be of immense help to NDIC in the area of distress management and prevention strategies. And also in the area of failure resolution option in banking industry.
- Students who may wish to know the extent of distress in the banking industry and the trend of distress as it affect the modern banking will also benefit from this work.
1.8 SCOPE, LIMITATIONS AND DELIMITATIONS:
While the banking impact distress in Nigeria will theoretically serve as the population of study. The project is designed to appraise the impact of bank distress on the profit growth of Union Bank of Nigeria Plc, First Bank of Nigeria, United Bank for Africa and Guarantee Trust Bank. It will also analyse the trend of these banks profit within a period of 10 years (1992-2001).
1.8 DEFINITION OF TERMS
What is Distress? It can be defined as an extreme suffering caused by lack of money or a state of danger, calamity and misfortunate acute poverty.
What is an Evaluation? This can also be defined as form of idea or judgment of something and also to work out something in numerical value.
What is Impact? This can be define as a strong effect or impression to bank. It is also a situation whereby something will be to be press closely or firmly together.
HOW TO GET THE FULL PROJECT WORK
PLEASE, print the following instructions and information if you will like to order/buy our complete written material(s).
HOW TO RECEIVE PROJECT MATERIAL(S)
After paying the appropriate amount (#10000) into our bank Account below, send the following information to
08139462710 or 08137701720
(1) Your project topics
(2) Email Address
(3) Payment Name
(4) Teller Number
We will send your material(s) immediately we receive bank alert
BANK ACCOUNTS
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 0046579864
Bank: GTBank.
OR
Account Name: AMUTAH DANIEL CHUKWUDI
Account Number: 2023350498
Bank: UBA.
HOW TO IDENTIFY SCAM/FRAUD
As a result of fraud in Nigeria, people don’t believe there are good online businesses in Nigeria.
But on this site, we have provided “table of content and chapter one” of all our project topics and materials in order to convince you that we have the complete materials.
Secondly, we have provided our Bank Account on this site. Our Bank Account contains all information about the owner of this website. For your own security, all payment should be made in the bank.
No Fraudulent company uses Bank Account as a means of payment, because Bank Account contains the overall information of the owner
CAUTION/WARNING
Please, DO NOT COPY any of our materials on this website WORD-TO-WORD. These materials are to assist, direct you during your project. Study the materials carefully and use the information in them to develop your own new copy. Copying these materials word-to-word is CHEATING/ ILLEGAL because it affects Educational standard, and we will not be held responsible for it. If you must copy word-to-word please do not order/buy.
That you ordered this material shows you have agreed not to copy word-to-word.
FOR MORE INFORMATION, CALL:
08139462710 or 08137701720
YOU CAN ALSO CALL:
08068231953, 08168759420
Visit any of our project websites below:
www.easyprojectmaterials.com
www.easyprojectmaterials.com.ng
www.easyprojectmaterial.net
www.easyprojectmaterial.net.ng
www.easyprojectsolutions.com
www.worldofnolimit.com
www.worldofnolimit.com
Tags: THE EFFECT DISTRESS RESOLUTION OPTIONS ON THE PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA (A CASE STUDY OF SELECTED COMMERCIAL BANKS)
ABSTRACT
This work “The effect of distress resolution options on the profitability of commercial banks has the objective of showing the effect of distress resolution options on the profit growth of commercial banks. The causes of bank distress in Nigeria and the possible prevention strategies or resolution options of bank distress. The review of related literature was done to give an in depth knowledge of the topic to the researchers. Both primary and secondary sources of data were used by the researchers.
Simple statistical tools like T-test, least square (B) and tables were used to analyse the data collected. The following findings were made; Banks made lower profit during distress period and higher profit during distress period and higher profit after distress period. Meanwhile, banks generally made lower profit during distress period. We recommended that the supervisory arsenals to ensure minimum distress with little or no effect when it occurs.
TABLE OF CONTENT
Title page ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vi
Table of Content vii
CHAPTER ONE
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of the problem 5
1.3 Purpose/Objectives of the study 5
1.4 Research Questions 6
1.5 Research Hypothesis 6
1.6 Significance of the Study 7
1.7 Scope, Limitations and Delimitations 7
1.8 Definitions of Terms 8
CHAPTER TWO
2.0 Review of Related Literature 10
2.1 Definition of Distress in Banking Industry 10
2.2 Symptoms of Distressed Banks in Nigeria 14
2.3 Causes of Banking Distress 16
2.3.1 Capital Inadequacy 18
2.3.2 Inept Management 19
2.3.3 Ownership Structure/Political
Interference in Management of Banks 20
2.4 Distress Management and Failure Resolution Option 21
2.5 The Role of Banks in an Economic System 30
Reference 33
CHAPTER THREE
3.0 Research Design and Methodology 35
3.1 Research Design 35
3.2 Area of Study 36
3.3 Population 36
3.4 Sample and Sampling Techniques 37
3.5 Instruments of Data Collection 37
3.6 Methods of Data Presentation 38
3.7 Methods of Data Analysis 38
Reference 40
CHAPTER FOUR
4.0 Data Presentation and Analysis 41
4.1 Graphical Illustration of Banks Profit 43
CHAPTER FIVE
5.0 Findings, Recommendation and Conclusion 54
5.1 Findings 54
5.2 Recommendation 56
5.3 Conclusion 58
Bibliography 59
Appendix 61
PROPOSAL
The topic “The effect of distress resolution options on the profitability of commercial banks in Nigeria.(A case study of selected Commercial banks)
The Topic “The topic The effect of distress resolution options on the profitability of commercial banks in Nigeria” is posed to appraise the effect of distress on the profit growth of commercial banks. It measures the way in which distress affects the profit of commercial banks negatively or otherwise. It also offers resolution options
For effective execution of this work a ten year profit trend of some selected banks will be evaluated. This ten year profit will cover the period of distress and after distress for a proper appraisal of the work.
Meanwhile the profit of these banks will be collected using a primary data source (Annual Report) and secondary sources of information and there primary data will be analysed using the most appropriate statistical tools for an accurate result.
However, there will also be a formulation of hypothesis which is based on the known negative implication of distress. Though, this hypothesis and also there will be a formulation of research questions which will be sample in relative to the objective of the work for the best result.
After all, an inference will be drawn based on the outcome of our statistical test. Based on the results obtained in our tests there will be a recommendation thereof.
The distress in a bank made the banks to have lower profit during distress period and higher profit after distress permit, meanwhile, generally, banks made lower profit during distress period, due to the insufficient cover of losses from the profit generate internally was unable to generate internally positive capital.
The bank or some banks also experience illiquidity or insolvency, this is resulting in a situation whereby the banks could no longer met its liabilities and all there brings about illiquid. These is also insolvent in the bank when the value of its realizable assets is less than the total value of its liabilities.
Furthermore, the inability of a financial institutions to bridge its primary obligation of creating credit and loss of liquidity or the liability of the bank to turn assets into cash to meet any abnormal demand for cash by their customers.
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
In any modern economy, the efficient production and exchange of goods and services requires money and bank is the instrument for affecting it. The last few years have been both traumatic and revolutionary for the banking industry. The industry produced the largest number of technically insolvent and under capitalized banks. The magnitude of distress in the nation’s banking industry reached on unprecedented level making it an issue of concern to the government, the regulatory authority, the bankers and the general public.
The Nigeria banking scene was characterized by changes designed to promote banking in the country. The changes may be categorized into phases, but due to the nature of our work we will consider two phases: namely, the era of laissez-fair banking (1894-1952), the era of limited banking regulator (1952-1958). During the first phase, banking industry was monopolized by foreign banks, principally the African banking corporation which was the precursor of the (BBWA) British Bank for West African the present First Bank of Nigeria the Barclays bank DCO (Dominion Colonial and Overseas) the present day Union banks, and the British an French Bank, the for-runner of the present United Bank for Africa. Although discrimination against Nigerians by these banks led to the establishment of some indigenous banks which unfortunately offers litter or no competition to the foreign banks essentially because of their weak capital base or poor managerial capacity. Consequently, all but three of the indigenous banks failed. The survived includes the National Bank of Nigeria established in 1933, the Agbomagbe Bank (now Wema Bank) established 1945 and the Africa Continental Bank 1947.
A commission of inquiry headed by G.D. patron set up in 1948 to investigate the business of banking in Nigeria. Their report led to the enactment of the first banking legislation in Nigeria, the banking ordinance of 1952. The 1952 ordinance laid down the standard and procedure for the conduct of banking business by prescribing the mandatory minimum capital requirement for banks both expatiates and indigenous banks at the tune of ∑100,000 and ∑12,500 respectively and it also introduced regulations to check bank failure. However, all the indigenous bank established in the country during this period also all failed. The bank failures of this era were attributed largely to the monopolistic structure of the banking industry, which allowed the foreign banks to enjoy exclusive patronage from British firms. The indigenous banks that survived was able to make it because of the support they got from their state government.
The distress phenomenon in Nigeria banking industry is of recent origin. The manifestation became discernable with some policy shocks starting in 1988 with the Central Bank of Nigeria (CBN) directive to banks that naira backing for foreign exchange application be lodged with CBN. Thus was followed in 1989 by another directive requiring public sector deposits to be transferred to CBN. These two directives exposed the precious liquidity position of some banks and the distress they have subterraneous harbored. What was thought to be a temporary liquidity problem for few banks soon caught up with a lot more banks.
It is important to stress in this work that banking system was already in distress by the time NDIC was established. By them, about 7 (seven) banks were known to be technically insolvent. The government at that time, did not embark upon a clearing exercise that would have removed from the system that distressed institutions because it was feared that such an action would lead to loss of public confidence and flight of foreign capital more so there was no deposit insurance institution to expeditiously manage such bank closures. The NDIC was nevertheless required to insure all banks. That means that the corporation has been involved in managing distressed banks even before it could settle down and minister enough resources for this important task.
The intermediating role of banks and their relevance both in the transmission of monetary policies and in the payment system underscore their importance as well as the problem that bank distress at the prevailing dimension in our economy could precipitate. Arising from their intermediation banks generate financial resources ad put these at the disposal of deficit economic growth in the form of increased employment of otherwise idle resources and this in turn leads to increase output. Therefore, an industry wide insolvency of banks, such as the one experienced in Nigeria, should be expected to retard the economy’s rate of capital formation, reduce its level of employment and output, and ultimately the pace of economic growth.
1.2 STATEMENT OF THE PROBLEM
A serious problem posed by widespred distress among banks is the threat to banking habit and the development of an efficient payment mechanism. The loss of confidence, the after math of the distress that hit the banking sector forced several business to take ferver risks by taking back their fund to well established safe havens dominated by older generation banks.
This research wok is therefore concerned with “Evaluating the impact of bank distress on the profit growth existing of commercial banks. Using ( A vase study of selected Commercial banks).
1.3 PURPOSE/OBJECTIVE OF THE STUDY
The main purpose/objective of this study is to have an overview of the effect of bank distress on the profit growth of commercial banks. Investigate into the reasons for bank failure in Nigeria.
Other objectives include:
- To evaluate the causes of bank distress in Nigeria. To find out the impact.
- To find out the possible prevention strategies or failure resolution options of bank distress.
1.4 RESEARCH QUESTIONS
(1) What are the causes of bank distress?
(2) What is the impact of bank distress?
(3) What is the profit growth rate of existing commercial bank during distress.
(4) What are the effects of bank distress?
(5) What are the possible solution options to this phenomenon in the banking scene?
1.5 RESEARCH HYPOTHESIS
H1: Distress has no effect on the average profit of commercial
bank
Ho: Distress has effect on the average profit of commercial
banks.
1.6 SIGNIFICANCE OF THE STUDY
This research project will be of importance of the following persons –
- New generation banks, which may wish to know the implication of banks distress in the banking industry and how to restore the confidence of the customers and uphold efficient payment mechanism.
- Nigeria deposit insurance corporation: The work could be of immense help to NDIC in the area of distress management and prevention strategies. And also in the area of failure resolution option in banking industry.
- Students who may wish to know the extent of distress in the banking industry and the trend of distress as it affect the modern banking will also benefit from this work.
1.8 SCOPE, LIMITATIONS AND DELIMITATIONS:
While the banking impact distress in Nigeria will theoretically serve as the population of study. The project is designed to appraise the impact of bank distress on the profit growth of Union Bank of Nigeria Plc, First Bank of Nigeria, United Bank for Africa and Guarantee Trust Bank. It will also analyse the trend of these banks profit within a period of 10 years (1992-2001).
1.8 DEFINITION OF TERMS
What is Distress? It can be defined as an extreme suffering caused by lack of money or a state of danger, calamity and misfortunate acute poverty.
What is an Evaluation? This can also be defined as form of idea or judgment of something and also to work out something in numerical value.
What is Impact? This can be define as a strong effect or impression to bank. It is also a situation whereby something will be to be press closely or firmly together.
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Tags: THE EFFECT DISTRESS RESOLUTION OPTIONS ON THE PROFITABILITY OF COMMERCIAL BANKS IN NIGERIA (A CASE STUDY OF SELECTED COMMERCIAL BANKS)
