study examines the banking sector in a deregulated economy and the need for
research project has been divided into five chapters as follows:
one provide information on the study and included under this are general
introduction, statement of problem of the study, purpose of the study,
significance of the study, among others.
two deal with review of relevant literature by highlighting current information
on the area of study.
three deal with the design and methodology of the research project while
analysis and interpretation of data was presented in chapter four.
chapter five provides summary of the study, conclusion and necessary
TITLE PAGE i
TABLE OF CONTENTS
ONE: GENERAL INTRODUCTION
BACKGROUND OF THE STUDY
STATEMENT OF PROBLEM
OF THE STUDY
OF THE STUDY
AND LIMITATION OF THE STUDY
TWO: LITERATURE REVIEW
2.2 THE RATIONALE FOR BANK REGULATION
2.3 INHERENT RISK IN BANKING INDUSTRY
2.4 TYPES OF BANK REGULATION
2.5 THE NIGERIAN BANKING ENVIRONMENT
2.6 RATIONALE FOR DEREGULATION
2.7 THE NIGERIAN BANKING ENVIRONMENT DURING
SAP (DEREGULATION ERA)
THREE: RESEARCH METHODOLOGY
3.2 RESEARCH DESIGN
3.3 POPULATION OF THE STUDY
3.4 SAMPLING TECHNIQUE
3.5 SOURCES/METHODS OF DATA COLLECTION
3.6 METHOD OF DATA ANALYSIS
PRESENTATION AND ANALYSIS OF DATA
4.2 ANALYSIS OF RESPONDENTS’ BIO DATA
4.3 ANALYSIS OF RESPONSES OF THE RESEARCH
4.4 TEST OF HYPOTHESIS
CONCLUSION AND RECOMMENDATION
5.2 SUMMARY OF MAJOR FINDINGS
OF THE STUDY
are many banks operating in the Nigeria economy of which can be categorized
into commercial, merchant and other specialized banks which include
microfinance banks and mortgage institutions.
is increasing apprehension that some of these banks may fail unless some
drastic measures are introduced and put in place to stem the tide, hence the
adoption of several other regulatory measures by the Central Bank of Nigeria
(CBN) and the Federal Ministry of Finance (FMF).
measures are necessary because the stability of the Nigeria banking system is a
major pre-requisite for economic development coupled with the sensitive nature
of the banking sector.
becomes imperative for the Government to instill confidence in the system to
allay fear being expressed in some quarters so that the occurrence of mass bank
failure of the 1940s and 1950s do not repeat itself.
Nigeria Deposit Insurance Corporation (NDIC) was established in 1988 as a
regulatory body to protect customers’ deposits and the banking system against
what is termed “A Bank Run” and to ensure fair play amongst competing banks.
These considerations were derived from the lessons of history (as stated above)
and the realities of present climate in the country.
introduction of NDIC generated a lot of controversies especially in the area of
premium payable and the maximum claims by depositors in the event of bank
failure. Some believe that the maximum amount claimable is too small and that
the premium payable should be of differential rating.
introduction of Failed Banks (Recovery of Debts) and Financial Malpractices in
Banks Act 1994 to prosecute the bank debtors and the recovery of debts from
their various debtors even in absential is another commendable step towards
checking bank failure.
failure, if not properly handled and controlled, its multiplier effect on the
depositors and the general public could be disastrous.
The deregulation of the banking sector
in 1986 transformed the banking industry into more vibrant and active one but
it also led to proliferation of banks with the attendant problem of the banks
virtually chasing the same customers. Thus the prevailing structure of the
industry simply encourages foreign exchange scammers to take advantage of
weakness in government policies to plunder the economy. Deposit Insurance was
also established to reduce the risk of bank failures
In other to address the major issues
underlining the research, an attempt will be made to provide answers to the
Does deregulation of the banking system
lead to financial stability in the economy?
Is the establishment of the Deposit
Insurance Scheme able to boost depositors’ confidence that results into sound
1.3 OBJECTIVE OF THE STUDY
its inception in 1988, Nigeria Deposit Insurance Corporation (NDIC) has been
the main focus of banks, their customers and the general public. All these
sectors have different opinion regarding the roles played by NDIC and its
ultimate effects on the overall banking industry.
purpose of this project therefore is to examine the role of NDIC in the banking
environment and the extent to which it has been able to achieve its statutory
1.4 RESEARCH QUESTIONS
deregulation of the banking system a good development in Nigeria?
deregulation of the banking sector contributed to the growth of the
financial system in Nigeria?
- Is the
establishment of Deposit Insurance Scheme timely in Nigeria?
1.5 RESEARCH HYPOTHESIS
In order to draw a reliable inference about the
population based on samples to be collected, the following hypotheses are
Deregulation of the banking system has not contributed to the growth of the
banking system in Nigeria.
: Deregulation of the banking system has contributed to the growth of the
banking system in Nigeria.
establishment of the Deposit Insurance Scheme is not timely and has not
assisted in the stability of the banking system in Nigeria.
establishment of the Deposit Insurance Scheme is timely and has assisted in the
stability of the banking system in Nigeria.
OF THE STUDY
project is to highlight and educate the members of the public about the need
for a Deposit Insurance Scheme, how the scheme is being operated and to equally
determine the role of financial institutions in the economic development of the
1.7 SCOPE AND LIMITATION OF THE STUDY
in a deregulated economy: the need for depositors’ protection is a very broad
one but for the purpose of this project work, the study will be restricted to
the Nigeria Deposit Insurance Corporation.
1.8 DEFINITION OF TERMS
BANK RUN - A situation where bank depositors are demanding
for their deposits at the same time which will affect the liquidity of the
banking system in an economy.
CBN - Central
Bank of Nigeria
INSURANCE: Deposit Insurance is a system precipitated by fear
on the part of the public that a bank may fail and depositors may suffer
SAFETY NET: A financial stability mechanism that usually
comprises the deposit insurance function, prudential regulation and
supervision, and the lender of last resort function.
FMF - Federal
Ministry of Finance
The winding up of the business affairs and operations of a failed insured
depository institution through the orderly disposition of its assets.
A mandate is a set of official instructions or statement of purpose of a firm
or an organization.
NDIC - Nigeria
Deposit Insurance Corporation
Structural Adjustment Programme
RISK: A risk that has implications for the general health
of the financial system and can have serious adverse implications for financial
stability and overall economic conditions.
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