TABLE OF CONTENTS
Title
Page
Certification
ii
Dedication
iii
Acknowledge
iv
Table
of Content v
Chapter One
Introduction
1
Significance
of the Study 2
Scope
and Limitation of the Study 3
Research
Methodology 3
Definition
of Study 4
References
5
Chapter Two
Introduction
6
The
Imperative of Bank Recapitalization in Nigeria 6
The
Imperative of Bank Recapitalization 12
Option
Available for Bank Recapitalization 13
Conclusion
20
Recommendation
21
Chapter Three
Summary
Conclusion and Recommendation 22
Summary
22
Conclusion
22
Recommendation
23
References 24
CHAPTER ONE
INTRODUCTION
The
word “capitalization” was not a business word just two year ago. That it has
come to stay portends a good omen that will change the face of banking business
forever and would undoubtedly speed ‑the recovery of the Nigerian ailing
economy. The situations in banks are dull in terms of financing major projects
apart from other domestic services offered its. numerous customers. As a result
of this poor banking practice, many of these banks enjoy round‑tripping, money
laundering and lobbying to keep government revenue accruable to states and
local governments, to survive.
Reports
have been unfavourable to the banks for their productivity to cut comers. The
revolution of Nigerian Banking Industry. The governors of the Central Bank of
Nigeria, Prof Charles Soludo, in his maiden speech to bankers on 23 March,
2005, said that most banks in Nigeria have a capitalization of less then
$10million. Even the largest bank in Nigeria, has a capital base of about $240
million compared to $526 million for the smallest bank in Malaysia. In view of this,
if the trend remains unchanged, there might be no meaningful development in the
banking sector. He further observed that the sector is highly concentrated, as
the, ten largest banks account for about 50 percent of this industry's total
assets and liabilities while there were 89 deposit money banks operating in the
country comprising institutions of various sizes and degrees of soundness.
Addressing
the factor that may have encourage sharp practice, Soludo asserted that the
Small size of most of the banks, each with expensive headquarters, separate
investment in software and hardware, heavy fixed costs and operating expenses,
and with branches in few commercial centres lead to very high average cost for
the industry. To this end, fie explained further that this in turn has
implications for the cost of Intermediation, the spread between deposit and
lending rates and puts undue pressures on banks to engage in sharp practice as
means of survival.
Addressing
the role banks play in any economy he buttressed his facts further by saying
that banking system occupies a unique position in every economy and that is why
it often attracts more than a casual regulatory attention. His words: out
industry in the 21st century must have a moral face and live up to
some medium of social responsibility. Capitalism must have a social face and
human soul to be sustainable. This is the lesson of world industry. To appraise
the impact of the N25bn capitalization in Nigerian banking industry.
SIGNIFICANCE OF THE STUDY
The
final work of this research study will serve as guide for banks to imbibe best‑practice,
corporate governance, improve on self‑regulation, institute IT‑driven culture
and seek to be competitive in today's globalizing world. Will emphasize
diversification of the productive base of the economy as fundamental challenge
of economic management, will challenge banks to become more innovative in their
intermediation function, and especially to increase financing to the productive
sectors. Also, the original study of this project will suggest the
collaboration of Economic and Financial Crimes Commission (EFCC) in the
establishment of the Financial Intelligence Unit (FIU) and the enforcement of
the anti‑money laundering, economic crime measures and other security agencies
to ensure compliance and entrench transparency, accountability in various bank
transactions to forestall sharp practice.
SCOPE AND LIMITATION OF THE STUDY
This
research study will cover how revolution has come to stay in the banking
industry, Bank capitalization, success of capitalization to date, role of banks
in developing Nigeria economy, and the benefits derivable from bank
recapitalization.
It
is worth‑nothing that these are some factors capable of Remitting the success
and value of this study. Such factors may include, timing, financial
constraint, lack of materials, wrong attitudes of interviewees towards research
questionnaire etc. Nevertheless, these factors cannot disrupt the attainment of
major objectives of this study.
RESEARCH METHODOLOGY
The
research work shall be conducted through.
a. Research Questionnaires
b. Personal Visitation
c. Personal Interview
d. Review
of literature (i.e. Journals, magazine, textbooks, newspaper e.t.c).
DEFINITION OF TERMS
a. Capitalization: An idea of setting a
minimum capital for a particular business that is enough for effective and
efficient operation of the business.
b. Economy: The relationship between
production, trading and the supply of money in a particular country.
c. Finance: The management of money. It is
the planning, organizing and controlling of money in a business.
d. Revenue: The total amount of money that
accrues to the government or a business from various sources.
e. Central Bank: The highest financial
institutions in Nigeria that monitors and regulates other financial
institutions like banks, insurance companies, discount houses etc in the
country.
f. Diversification: An idea whereby
economic resources in a country are directed towards the development of all
sectors of an economy.
g. Investment: An act of putting a certain
amount into an activity or a project that will yield some benefits in the
future.
h. Assets: The properties of a business,
provided by both the owner(s) and outsiders,
used in running the business.
i. Liabilities: These are financial
obligations (debts) a business is unable to meet within a specific time of
period.
j. Intermediation: Banks activities that
involves bringing both lenders and borrowers together for productive purposes.
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