Bank Failure In Nigeria: Problems And Difficulties

Project and Seminar Material for Accountancy / Accounting

Bank Failure In Nigeria: Problems And Difficulties


The aim of writing this project is to explain the problem and difficulties being face by banks as a result of bank failure with specific reference to banks.

To achieve this aim the research work has been classified under five chapters.

  • The first chapter deals with the introduction statement of problems, objectives of the study, purpose of study, significance of the study delimitation and limitation of the study.
  • The second chapter, deals with the literature review or review of literatures/related.
  • The third chapter deals with the bad debt in banks.
  • The fourth chapter deals with statistical analysis of data and discussion of the result.
  • The last chapter deals with recommendations and conclusion.

Chapter One


The term bank means a place where money and valuable are kept for safety. So bank failure means the inability of the bank to meet its statutory obligation. The financial sector of any economy plays an important role in promoting and supporting economic growth and development. When the financial sectors in distress it cannot perform this role effectively. Modern commercial banking business commenced in Nigeria at about 1992. At that time, it was solely a business for the foreigners. Even at independence in 1960, about 80% of Nigeria banking business remained in the hand of foreigners. The skews in the ownership structure in fall our of foreigners was probably responsible for the observed lack of access to bank credits by indigenous during the period.

To redress this situation and meet the financial requirements of Nigeria business, some indigenous banks commenced operation in the late 1920 and 1930 at that time the banking business was virtually unregulated those new indigenous commercial and merchant bank were later to be faced with problem of under capitalization in experienced management hostile and unfair competition from foreign bank. The British Colonial authorities suddenly saw the need to regulate banking business in Nigeria and therefore commissioned Mr. G.D. Pation in 1948 to study and determine the need for banking regulation in Nigeria, following patlon’s recommendations, the bank ordinance of 1958 was enacted the implementation of which led to the failure of about 16 indigenous banks.

By 1954, 21 of the 25 indigenous banks operating in the country collapsed of the remaining four only two are still operating in Nigeria today. This become a source of worry to the public, manageress and regulatory bodies like Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC). This study however, intends to sue Cobi bank as a case study, it is hoped that the end of the study, the causes and lost of bank failure and suggestion offered to deal with the problem.

1.1 Background Of The Study

The term bank means a place where money and valuable are kept for safety. Therefore, following this bank important role in an economic is failure constituting a problem to me hence the resolution to embark on this research study. This study however, intends to use bank as a case study. It is hoped that at the end of the study the cause and cause and cases of bank failure in the modern economy will be know better and suggestion offered to deal with the problem.

1.2 Statement Of The Problem

This research work intends to assess the major causes of bank failure in Nigeria and also proper possible solutions to those problems.

1.3 Purpose Of The Study

The purpose of this research work is to meet the requirement as a pre-requisite for the award of national diploma (ND) in banking and finance.

1.4 Objective Of The Study

  1. To identify the major causes of bank failure in Nigeria.
  2. To describe implications of the bank failure to the economy.
  3. To suggest possible ways of tracking the problem.

1.5 Significance Of The Study

The researcher assumes that identifying these bank failure products and as certain public awareness will go a long way in improving banking/bank failure in Nigeria secondly.

1.6 Limitation Of The Study

This research work has been easy as a result of time factor. This is because time management constitute a manor constraint that under the debt coverage of the scope, also the researcher encounters financial problem in the course of collecting data for the research.

Bank Failure In Nigeria: Problems And Difficulties

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