Abstract
This project work was focused on the
impact of globalization on Nigeria banking sector and various theoretical and
literature issues were discussed. An empirical force affects the Nigerian
banking sector, using the ordinary least square estimation (OLS) techniques
called the exact AR Newton Raphson method. The
source of data was emanated from the secondary source, the Central Bank
Statistic Bulletin, National Burea of Federal Office of Statistics (FOS)
Statistical Report, and other existing relevant economic literature as well as
text. Data collected were presented in tables and percentages for easy
understanding. The result indicated that all variable that is foreign private
investment, inflation rate, foreign banks in Nigeria and exchange’ rate,
affects Nigerian banking sector but that exchange rate among all had a
significant impact on banks credit. Given the findings of this study, the weak
roles banks in ensuring adequate and productive bank credit for development
purpose has continued to be the bane of Nigerian financial system. However, it
was recommended that globalization promoting the provision of adequate and
productive credit to users policy measures must be put into actions to gear up
stakeholders towards reducing the negative impact of globalization on Nigerian
banking sector.
TABLE
OF CONTENTS
Title
Page i
Certification
ii
Dedication iii
Acknowledgements
iv
Abstract
v
Chapter One: Introduction
1.1 Background to the Study 1
1.2 Statement of Problem 4
1.3 Objectives of the Study 4
1.4 Research Questions 5
1.5 Statement of Hypothesis 6
1.6 Scope of the Study 6
1.7 Significance of the Study 7
1.8 Limitations of the Study 8
1.9 Definition of terms 8
Chapter
Two: Review of Related Literature
2.1 Introduction 10
2.2 Globalization and the Banking System 13
2.3 Pre-condition for Banking Sector 16
2.4 The impact of globalization on the banking system 19
2.5 Globalization and foreign bank presentation
in
Nigeria
24
2.6 Issues in banking sector globalization in
Nigeria 27
2.7 How can Nigeria best globalize it’s banking
sector 30
2.8 Globalization and National Policy 31
Chapter
Three: Research Method and Design
3.1 Introduction 33
3.2 Research Design 33
3.3 Description of Population of the Study 33
3.4 Sample Size 34
3.5 Sampling Techniques 34
3.6 Sources of Data Collection 34
3.7 Methods of Data Presentation 34
3.8 Methods of Data Analysis 35
Chapter
Four: Data Presentation, Analysis and Interpretation
4.1
Introduction 36
4.2 Presentation of Data 36
4.3 Data Analysis 38
4.4 Hypothesis Testing 48
Chapter
Five: Summary of Findings, Conclusion and
Recommendations
5.1 Introduction 50
5.2 Summary of Findings 50
5.3 Conclusion 51
5.4 Recommendations 52
References 55
CHAPTER
ONE
INTRODUCTION
1.1
Background to the Study
The role of the banking system as an
engine of economic growth is appreciated by the functions, the constituency
performs. The banking sector provides liquidity that services the needs of the
economy, facilitates the mobilization of surplus funds from both domestic and
foreign sources and optimally allocates such mobilized resources to deficit
economic limits for product investment. The banking system also provides
infrastructure for monetary policy transmission among other thing. In recent
years the Nigerian banking sector has been hit by three major trends namely
deregulation and privatization the introduction of new technologies and new
products and the entry of new competitors. These trends were the outcome of
forces of globalization.
According to Fajigbesi and Ozughalu
(2003), globalization is faced with some challenges which do affects the
banking sector especially the immensely baking system from this a consensus has
emerged in recent decades emphasizing the critical role of globalization in the
process of Nigerian banking sector development.
Globalization implies that there will be
massive presence of foreign banks in Nigeria with the influx of foreign banks,
there will be tremendous increase in the degree of competition in the degree of
competition in the Nigeria banking sector. Indeed, the banking sector in
Nigeria is bound to face global financial system, the survival of banks in
Nigeria will be to a large extents depend on hour well they understand the
intricacies of globalization and how well they are prepared to operate with in
the new system.
Until recently, Nigeria banking system
have not performed impressively when compare to other region for instance power
and energy has not grow to the expected level, technologically Nigeria is still
behind in operation, basically the imfrastral system of the country is yet to
be upgraded to a necessary standard. However, Nigeria banking sector experience
significant gains in the current re-capitalization of Nigeria banks. These
changes took place within the context of globalization/ internationalization
policies and reflect part effort by Nigeria government to integrate Nigerian
banks into the global financial market.
The recent concern about growth of
Nigeria Banking Sector is the impact of globalization to the sector as revealed
by Obadan (2003). The Banking sector plays a critical role in liberating a
country’s wheels for beneficial participation in the dynamics of globalization.
Undoubtedly, globalization has impacted
on most factors identified in the literature to be determinants of changes in
the banking sector. The nature of these relationship need to be ascertained the
study of these type, is therefore warranted since it’s major objective is to
examine empirically the impact of globalization the Nigeria banking sector.
1.2
Statement
of Problem
The crux of this study is to find out
the impact of globalization in Nigeria banking system, and how Nigeria banking
sector can benefit and manage the cost of globalization, with regards to the
above researcher one of the view to review existing literature and fill the gap
that exist by proffering possible solutions is to identify problem.
1.3 Objectives
of the Study
The main principal objective of this
study is to empirically investigate the impact of globalization on Nigerian
banking system. Specifically the objectives of the study will also include.
1. To
identify the major globalization indicators that affect Nigerian banking
system.
2. To
identify the cost and benefit of banking sector globalization.
3. To
find out the pre-conditions for globalization in the Nigerian Banking Sector.
4. To
evaluate the penetrator of foreign bank on Nigerian Banking System.
5. To appraise policy
measure of government towards ensuring Nigeria banks benefits from
globalization.
1.4
Research Questions
1. What
are the globalization factors that affect the Nigerian Banking Sector?
2. What
are the cost benefits of globalization to Nigerian Banking System?
3. What
are the preconditions for banking sector globalization?
4. To
what extent has foreign banks penetrated Nigerian banking system?
5. Does foreign and domestic
banking behave in the same way?
1.5 Statement of Hypotheses
In order to achieve the objectives of
this study the following hypothesis are stated.
Hypothesis
One
Ho: There is no significant
relationship between banks capital base and economic growth.
HI: There is significant relationship between
banks and capital base and economic growth.
Hypothesis
Two
Ho: There is no significant
relationship between bank capital base and foreign private investment.
HI:
There is a significant
relationship between bank capital base and foreign private investment.
1.6 Scope
of the Study
These research works cover Nigeria. To
capture the Impact of globalization on Nigeria Banking System substantially with
special attention to Zenith Bank Plc and make statements that is based on facts
and figures (objectives) and to enhance unbiasedness, a period of 36years
encompassing serve as the time horizon for the study. The constraints
encountered in articulating this work include the difficulties and financial
constraints involved in getting date, the time spent on solving and organizing
the work combined with normal academic activities and other logistics problem.
A poor response from expert in the field was also a factor at limits this
study.
1.7 Significance
of the Study
The importance of knowing how
globalization impact on Nigerian banking system can be over emphasized. This
study is very important as it would examine to what extent certain global
variables explained what happens to Nigeria banking sector.
In fact, this research work will add to
the ready-made shelf of well-structured publicly researcher projects which
would be a hard tool for bankers, and policy makers in making decisions on how
to influence banking sector development through benefiting from the outcome of
globalization. Student in Nigeria and in other less developing countries
interning to broaden their knowledge about the nexus of globalization and
banking sector development.
Research will also find this material
useful for subsequent research work on the issue. Government and financial
regulators would also find this research work handy especially in the areas of
policy formulation and stimulation.
1.8 Limitations of the Study
There have been lots of challenges
carrying out this research work, which has led to the limitation of the study,
busy schedules of managers and staff of the organization which we needed to
source for information which made my trips numerous, some information tagged “top
secret” were not disclosed.
1.9 Definition of Terms
Banking:
This is the provision of payments facilities, credit and capital to
individuals, firms and government universal banking combines these functions in
the same banks, as for example in European countries including Germany. Modern
banking is increasingly adding further functions including stock broking and
port folio management.
Banking
System: This is the network of institutions responsible for
providing banking services are actual banks providing services to the general
public which may be universal bank or specialist institutions dealing with
particular types of banking business.
Globalization: This is the process by which the whole world
becomes a single market i.e. goods and services capital and labour are treaded
on a world wide basis and information and results of research flow readily
between countries. The rise of the internet and the start which has been made
on liberalizing international trade in services will continue this movement in
the 21st century.
Financial
Sector: This is the part of the economy concerned mainly
with lending and borrowing long or short term loan which includes banks,
non-bank financial intermediaries such as building societies.
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