ABSTRACT
In the last fifteen years Nigeria has been
experiencing the most serious economic crisis. The first major factor that put
the country’s small – scale on the tendons position was the main stay of the
economy. Nigeria being among the major producer of crude oil, suffered
adversely from the effects of hurt in the world oil market. Nigeria depend on
oil exportation for over 90% of its foreign exchange earning and 85% it
government revenue. An appraisal of the contribution and constraints militating
against effect fulfillment of bank objectives is provided. I also observed that
if banks declare huge profit in a year, it is for the benefit of the economy
since part of it is invested in preferred sectors of the economy. And as well
will invariably create employment. Situation where government takes action to
penalize bank for declaring so called huge profits leaving out manufacturing
and oil companies is not encouraging at all. A case in point in the natural
housing funds decree of 1990, which require banks and insurance companies to
invest an amount equipment to not less than 10% of their loan and advance
rate. Or above these current account
rate. Such policy, it must be enforced, it should cut across all sectors of
economy.
TABLE OF CONTENTS
Title
Page - - - - - - - - - i
Declaration
- - - - - - - - ii
Approval
page - - - - - - - - iii
Dedication
- - - - - - - - iv
Acknowledgment - - - - - - - v
Abstract - - - - - - - - - vi
Table
of Contents - - - - - - - vii
CHAPTER ONE
1.1
Introduction - - - - - - - 1
1.2
Statement of
the General Problems - - - 2
1.3
Aims and
Objectives of the essay - - - 5
1.4
Significance of
the study - - - - - 6
1.5
Scope of the
study - - - - - - 7
1.6
Definition of
Terms - - - - - - 8-10
CHAPTER TWO
2.0
Literature
Review - - - - - - 11
2.1 Historical background of Commercial Bank - 12
2.2
Functions of
Bank in the Economy- - - - 15
2.3
CBN Regulation
on Commercial Banks - - 21
2.4
The Business
Environment and Future Prospect - 25
CHAPTER THREE
3.0 Summary, Conclusion and Recommendation - 27
3.1
Summary - - - - - - - - 27
3.2 Conclusion - - - - - - - 29
3.3
Recommendations - - - - - - 30-33
Bibliography - - - - - - - 34
CHAPTER ONE
1.0 INTRODUCTION
The aim of every government is to
provide its people with basic services, leadership and protect the entire
people’s interest within its power, for a government to do this, it must have a
sound and adequate financial planning to make it possible to cater for the
people’s need
To a large extent, any government which
comes into power has to depend on banks and other financial institution for
keeping of some of its development project also, the government agencies and
general pubic depends largely on loan from the banks to carry out their day to
day business affairs.
Generally, the main aim of every bank is
to minimize the last to running affairs of the bank and at the same time
maximizes owner’s profit. Some bank like
the Central Bank of Nigeria (CBN) and development banks, the farmers have the
main aim of correcting the economy while the later one established purposely to
develop some sector of the economy.
Note:
Eg. Industry, agriculture etc.
This bank despite the fact that they make profit, they are not profit
oriented.
Therefore, this research is based on the
role played by commercial banks to the Nigeria economy with particular
interest.
1.1 STATEMENT
OF GENERAL PROBLEM
The present improvement in the banking
industry may not wholly attributed to the rapid increase in the number of banks
but is the rapid growth of our economy that brought about by the structural
adjustment programme (SAP)
Though banking industry plays an
important role in the economy of any nation and there is no doubt, it is an
indispensable role to the Nigeria economy.
With these, this not to say that they do
not have lapses. Among the factors that
leads to the inefficiency in the banking industry are: -
a.
FINANCIAL
DISTRESS
Financial distress in
the Nigeria financial system is a problem that has of recent, assume an
intractable dimension.
b.
BAD MANAGEMENT
The singular factor
leaves a high stone of management which usually determine by
academic/professional qualification, relevant experience, technical know how,
business reflect, ability to formulate and implement good policies, leadership
qualities and styles etc. Because of the
relative attractiveness of banking especially with respect to the pay and
prospect, people from different professions find themselves in the mid system
of banking operations without proper grooming the fact that banking is a
district profession of its own with intricacies and idiosyncrasies.
c. INADEQUATE
CAPITAL BASES
There is a saying that
says a lifeguard in a swimming pool must himself be a good swimmer, for a bank
to enjoy confidence of depositors, it must have strong capital base as evidence
of strength. It is important that bank
operates profitably for the share holders have to increase through accreting to
statutory and general in services.
d. RISK ASSET
PORT FOLIO
This is no doubt a
reflection of poor management most banks do not have clear investment or credit
policy and there is absolutely no control on credit. In most cases, it is the managing director or
chairman or the promoters of these banks who have lending power and they lend
mainly to their own business and to friends without business or without
following the due assessments or control.
e. BOARD
ROOM CRISIS
It is unfortunate that
a business which begins in a spirit of annuity and cordially at times turns
into loss of face and tension among the sponsor. Problems have in the past arisen on such
topic as who plays what roles and people instability to concede to another,
people opinion have cause dissentients in the board room even physical France
as autocracy on the part of those who see themselves as the promoters or major
shareholders can often cause board room crisis. The monetary authorities had to
be carried into the management of some banks when things get out of hand until
the crisis is over. Board members engage
in protected legal battles and by the end of the day who loses? The rest of us.
1.2 AIMS AND
OBJECTIVES OF THE STUDY
The aims and objectives of this research
work is to investigate into the role-played by the commercial banks, which
cannot be over emphasized in the economic development of Nigeria.
The purpose of carrying out this
research work is to:
-
Present a
detailed and clear picture of the role played by commercial bank in the
economic development of Nigeria. Example
of what extort commercial banks have fulfilled their roles in economic
development.
-
Expose factor,
which affect and determine the role of commercial banks in the development of
the Nigeria economy.
1.3 SIGNIFICANCE
OF THE STUDY
The significance of the essay is
therefore based on
-
Identifying and
analyzing advises to commercial banks on how to apply the economic situation in
Nigeria.
-
Also in
identifying, analyzing and providing advises to the government and central bank
of Nigeria on how to adjust or improve the banking regulations.
-
It is also hoped
that the findings of this research work regardless of its limitation would give
the banking industries an insights knowledge of identifying ways to improve
customer services in terms of economic development.
-
In enlightening
customers of services available which are unknown to them.
1.4 SCOPE OF
THE STUDY
The research specifically covers
comprehensively the analysis of the major role played by the banking industry
to the Nigeria economy. The primary responsibilities of all types of banks that
we have in the industry have been touched in the literature review.
Generally, the author attempted to
examine their role of commercial bank to the economy, though there are several
financial and banking industries nation wide, I will limit my research to first
bank of Nigeria Plc. To represent the
banking industry. I particularly
consider the sources of fund to the bank and how these fund are fully utilized
to make its own contributions to our national development and at the same time,
maximize owner’s profit.
1.5 DEFINITION OF TERMS
a. BANKING
The business receiving money from
outside as deposit for safe keeping and making payment accrued which the money
is due for payment and also advancing loans to those who keeps money for safe
keeping as well as the public at large.
b. ACCOUNT
Is a period during which transactions
takes at the end and in which settlement must be made
c.
BANKER
These refers to group of persons who
receive money from individuals for safe keeping in the agreement that he will
refund the said amount collected either on demand or at some certain date
agreed upon.
d. CHEQUE
It is an order written by the owner to
the banker to pay on demand to the bearer of the cheque.
e DISHONORED
CHEQUE
A cheque, which the bank refused to
attend to for one reason or the other e.g irregular signature, post dated
cheque etc.
f. LOAN
The amount of money that is lend out and
that must be repaid within an agreed rate of interest usually for specific
period of time.
g. PASS
BOOK
It supplied to the customer by the bank
in which all entries are made of all deposits and withdrawals that are made.
h. UNPRESENTED
CHEQUE
These are cheque drawn by the drawer but
not yet presented for payment by the bearer.
i. OVERDRAFT
Is usually created on a current account
unlike a loan account where only periodical payments are made. An overdraw account is a running account
where drawing and deposits are made. An
overdraft account is a running account where drawing and deposits are
made. In an overdraft account as
frequently as may be needed or received in connection with the business to meet
the account related.
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