The Effect Of Government Interference In Management Of Financial Institution (A Case Study Of Kingstone Bank Plc)

Project and Seminar Topics with material for Banking and Finance

The Effect Of Government Interference In Management Of Financial Institution (A Case Study Of Kingstone Bank Plc)

Table of Contents

  • Title page
  • Certification page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of contents

Chapter One


  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms

Chapter Two

Literature Review

  • 2.1 Management
  • 2.2 Theoretical Frame Work Literature Review
  • 2.2. i Central bank of Nigeria Recent Policy on Financial Institution
  • 2.2. ii Nigeria Financial Review in the Financial Institutions
  • 2.2. iii Kingstone Bank Operational Rules Regulation and Result
  • 2.2. iv Government Policy and Decree on Financial Institution
  • 2.2.v Government Roles in Financial Institution
  • References

Chapter Three

Research Methodology

  • 3.0 Research Design
  • 3.1 Population of the Study
  • 3.2 Sample Size Determination
  • 3.3 Sampling Procedure/Techniques
  • 3.4 Method of Data Analysis

Chapter Four

Analysis of Data Presentation of Result

  • 4.1 Introduction
  • 4.2 Question 2
  • 4.3 Summary of Result

Chapter Five

Summary, Conclusion and Recommendation

  • 5.1 Summary of the Study Findings
  • 5.2 Conclusion
  • 5.3 Recommendations
  • 5.4 Suggestion for Further Research
  • Bibliography
  • Appendix I
  • Appendix II
  • Questionnaire

Chapter One


1.1 Background of the Study

Management has been defined as the process of combining and utilizing organization’s resource of managerial to accomplish organization objectives. It is also a process of entrusting responsibility for effective planning and regulation of operation in an enterprise in fulfillment of a given purpose or task.

What then do we actually means by interference? Interference according to Webster’s dictionary is to take an active but unwelcome part in some else activity.

In this study it has been revealed that interference on financial institution by government as a whole is a noble in the right direction. This Niger financial system is very vibrant and highly competitive they have four basic product lines in the banking industry such as deposit base product, lending base product, fee base product, and technology base product. This was instituted by the observation during the research that financial institution benefited immensely by the government on the financial institution.

It is well known fact that number of service of financial institutions offers have increased by taking a fundamental nature of their business and it remains unchanged. This led to the conclusion that management in financial institution is surrounded with risk. Management which involves mismatches of assets and liabilities and it is cost borrowing and lending on the other side. To nurture the economy is to loan the part of development that has been the role of financial institution, mostly banks which has been constrained by number of facts in to the past price.
Now the industrial sector has been characterized by massive government involvement because of weak technolocal base, lack of linkages in infrastructure and policy investment highly production cost and goods that were uncompetitive internationally. Over the entire micro economic environment was highly unstable, witnessing capital fight, high interest or inflation rates negative real growth rates and fiscal excesses. With an external debt burden of about 27.46 at the end of 1997, the repayment burden put constraint on growth. Since 1995, however the federal government has been able to store some measure of fiscal discipline through low budget deficits which achieved stable interest and exchange rates regimes while pushing down inflation to a simple digit of 8.5 percent in 1998.
Aggressive reform and sanitation of the financial institution source were pursued. On the other hand, little or no attention was paid to the vital area of privatization of government utilities liberalization of the economic and improvement of infrastructure. The above review of the economy has been undertaken and other financial institutions were supposed to operate and provide financial to the industrial sector. Therefore, form the above review the researcher wants to use this study to explore those factors emanated from government interference in the management of financial institutions that inhibited them from effective discharging, their responsibility to the economy generally using the rules and regulation of Kingstone bank PLC to determine the extent it has contributed both positively and negative part of such interference in the institution.

The Nigeria institution is very vibrant and highly competitive. It consist of 105 viable commercial and merchant banks which are privately owned with a total of 2, 400 branches and development bank such as NBC, NIDB, PBN AND FMSN owned by the government. There are about 200 registered non bank finance houses of various sizes, part of the structural adjustment programme (SAP) introduced in 1986. This was the expansion and diffusion of the banking sector which has grown to 67 commercial and 55 merchant banks then 45 primary mortgage institution 228 branched of the people bank, 618 finance companies, 48 fully licensed by the CBN, 401 community banks and specialized bank by this null 1990’s there was endemic distress in financial system which led to collapse of many of the institutions in the industry.

Many commercial and merchant banks were liquidated with 26 banks (13 each for commercial and merchant) liquidated as recently as January 16, 1989. In this case, Kingstone bank of Nigeria PLC Enugu revealed that government interference in the management of positive type. Even though that there are some risks in embodying such rules and regulations line is their banking system such as deposit based on product lending base, product fee base, products and technology base.

Therefore the interference has help to accept the risk job of greater mobilization of saving from the surplus units and channel them to the deficit productive units of the economy and to ensure that no unable project is frustrated due to lack of funds and greater facilitation of synergies and sartorial linkages within the economy.

There are still problems resulting in such interference of which Kingstone bank are complaining of.

The effect of government interference in the management of Kingstone bank plc also covers limits of permissible business risk concentration capital and liquidity adequacy and statutory returns. The monetary aspect of regulatory includes control of over loading general structure of leading rates reserve requirement and foreign exchange. There are also regulations covering advertising staff loan. Loan directors and inside dealing supervision is employed to ensure effective management and control. The criticism led to gradual deregulation in 1984 and was subsequently accelerated with the adoption of (SAP) programme which gives room for the operation of free market forces given financial instructions and more direction to their operation and stimulation competitions in the financial system as a whole.

Consequently in 1988 the Nigeria deposit insurance corporation was established with regulatory power to protect depositors against bank failure and thereby strength the financial and impacted greatly on financial institution environment.

1.2 Statement of the Problem

Despite the interference of government in the management of financial institution existence in Nigeria especially in the area of control regulation and operation. Regulation does not guarantee that they will reverse bank failure and serious banking crises. No matter how effective and thorough the regulationary mechanisms are the problem may still occur as history has shown it. Even with high policy and regulation which usually accompany a serious bank crises or bank failure, it is to prevent impact of such failure from threatening the systematic last resort function on central bank.

Establishing of more financial institutions by both government and individual were implemented to solve the problem of poor service to customers and also dominance of foreign based bank by Nigeria indigenous bank to help in encouraging improved banking system in Nigeria, but still there is high production costs and goods that were uncompetitive, internally high interest rates and right among bank directors and unprecedented industrial unrest within the sector it exist due to shallow knowledge of management policy and regulation in this sectors of economy which help in paralyzing the whole system.

Also the problem exists due to hard core of such regulation and deregulation of policy to the financial institution.

1.3 Objective Of the Study

The main purpose of this study are:

  1. To find out how Kingstone Bank of Nigeria PLC is employing the government policy to ensure sound banking system towards acceleration of economic development in Nigeria
  2. To determine their growth and survival in the faces of various banking ordinance that was consolidated in central bank number 24 decrees of 1991 and the present day decrees.
  3. To ascertain the effect of government interference in the management of financial institution and type of environment it has created for the proper existence of financial instruction whether it is on the right director.

1.4 Research Questions

  1. Have the regulatory roles made Kingstone Bank big, strong, and reliable?
  2. Have government interference created a greater mobilization and measures in financial institution?
  3. Have the regulatory rule experienced better than deregulatory role today?

1.5 Research Hypothesis

In order to give focus to the study the following hypothesis were formulated.

  • Ho: the quality of sources rendered by the Kingstone Bank lead to increased on people patronage.
  • Hi: the quality of service render by government interference to management.
  • Ho: the cost charges on services by bank to citizen.

1.6 Significance of the Study

The findings of this study would be useful to the Kingstone Bank of Nigeria PLC and the management of financial institution in general as a guide to the banking system and formation of policies and decrees relative to the effectiveness the institution. The study would provide a data base for future researchers on the effect of government interference on financial institution.

The study also serves as an additional material to the work will as a long way in educating the readers on the significance of examining the achievement of government and how it helps to improve economy sector mostly on the part of monopoly especially in financial institution.

The study will provide in data base for future researcher on the effect of government interference on financial institution.

The study also serve as an additional material to the work and it will go a long way in educating the renders on the significance of examining the achievement of government and how it helps to improve economy sector mostly on the part of monopoly especially in financial institution.

The study will provide in data base for future researcher in government interference in the management of financial institution and add to the material outstanding in the library.

This study would be of important to any reader and assist government and financial institution in reviving their various policies.

1.7 Scope of the Study

This study is intends to cover:

  1. The new policies and decrees introduced in financial institution since the inception of structural adjustment programme in 1996.
  2. The impact of these policies on the operation of Kingstone bank of Nigeria PLC
  3. The challenges posed by these policies and decrees and the central bank effort to control the problem that arises by the implementation of the policies and regulation.
  4. This study will also cover the problems of Kingstone bank of Nigeria PLC which they encountered due to some government control in the management of their affairs and also the position aspect of the policies to the management of Kingstone bank Nigeria PLC.

1.8 Limitation of the Study

Studies of this nature are prone to limitation. My experience during data collection are the most of the respondent interrogate when regulate to addressing the question pose to them. They contended that this would be tantamount to exposing the company’s policies to the public and that their competition will capitalize on such policies of divulged.


In spite of the fact that the researcher explained the management of Kingstone bank that her study was purely academic test and the management was reluctant to information.


Enough time required for collection of data and other relevant facts. The researcher a final year student has to case the already limited time partly to read because of the work for her examination this time has affected the researcher.


A thorough research work imposed a huge financial burden that cannot be borne easily by a student for this reason the researcher had to be restricted to a small financial institution. (Kingstone Bank Nigeria PLC Enugu)

1.9 Definition of Terms:

Financial Institution:

This is the organization that responds to the financial system in the country, they provide both short term and long term fund.

Effective Operations

Being active progressive and consistent to financial institution operation on service.


Regulation is an act of being regulated or control role of governing a group of people.


A selected planned line of product in light at which individual decision is made and co-ordinate achieved. This can be chosen by government or business.


Valued too much.


Managing or being managed by the body of those in position of administrative authority.


Interference is to take an active but unwelcome part in some active

Chapter Five

Summary of Findings, Conclusion and Recommendation

5.1 Summary of the Study Findings.

From the research, it was revealed that government interference on the financial institution as a whole and kingstone bank of Nigeria PLC is a noble step in the right direction.

However it was observed during the research that Kingstone Bank benefited immensely by the government control in the management of the activities of financial institution. For instance the researcher gather a lot of policies which have considered a threat on their reputation a good will have now be adopted a result of government debt the recent prudential guideline on banking operation issued by the central categories of debt can be considered doubtful and lost (precisely between 12 months and above) previously the bank consider its relationship with such unpleasant measure but new, it is a matter of federal government control the instruction has been complied with.
Further more, this study implies that a good management system witness development that has varying impact in its operation. Worthy of mention also in the fact that interference has encouraged local sourcing of raw material of our local industries (A government policy popularly known as bank wards integrated) which was abandoned for developed industries variously located carelessly and now adopted and Kingstone Bank was found to be among the leading financial in this regard.

Despite, the fact that central bank might acquire powers that could lead to abuse populates. In daily champion of 23rd June 1997 although the decree is a good package for promise to striating operating in new dynamic market, it nevertheless grant CBN more power which could be abused by some unscrupulous officers and still was able to effectively monitor the monetary system of the economy by its function, it has been able to control the rigorous and complex task here in deregulation exercise impose on the financial institution.

It also goes to buttress that more financial failures/crises will be entertained by recent increase in the paid up capital base on some of the institution notable, commercial and merchant banks. Again it has encourage the establishment of new financial institution who say that Nigeria as developing Nation does not need those regulatory function now from the finding of this study, it has observed that staff of Kingstone Bank of Nigeria PLC agreed that government policies a sign of recovering and clearing out danger of some financial crises.

Lastly, this study also refers that government interference at a glance, has a positive impact. There is now operational effectiveness in Kingstone Bank of Nigeria PLC and other financial sector. For instance from the finding of the study, it was discovered that there is a phenomenal increase in the number of banks and other financial mobilization improvement in capacity utilization in industry, appreciable increase in non oil – exports especially manufactured substantial growth domestic product (DP) and improvement on local sourcing raw material in the agro – allied sub sectors.

5.2 Conclusion

The present study on government interference in the management of financial institution notable Kingstone Bank of Nigeria PLC Enugu would certainly supplement the existing knowledge on government control and regulation.

This study strongly adoracate for discipline in the banking sector as Ede. (1992) rightly started “the need for instilling discipline in the sector of killing the bank, rather it has a job to do.

Firstly, with the annual of new bank and other financial institution that has been seen keep competing with the order of the events. It had reached a stage of abandonment of armchair banking of adaptation of system approach to banking.

Secondly, in looking at the interference on the regulation systems there have been a remarkable improved customer service in our financial institution. Though. This has not been reduce and completely eradicated in other like Kingstone Bank, capable and better qualified staff are joining the banking profession this helps to improve services. Financial institution cannot stay out of danger and crises without some measure of adaptation of the regulation and policies will help them to be more efficient and effective in their operations.

Finally, therefore it can be asserted that there are laudable changes seen in our bank today of which could not be possible if government did not come into their management. This has enhances recovery of some distressed bank and encourages savings. It promotes banking habit and efficiency of banking service therefore enhanced recovery of some distressed bank and encourages savings. It also promotes banking habits and efficiency in the delivery of banking service and thereby enhances confidence in the system.

5.3 Recommendation

The objective of this study has been to determine how much government interference and the management of financial institution has gone in improving the banking system and habits of Kingstone Bank Nigeria PLC, also the researcher examine the role of government in regulating banking activities.

Base on these facts the researcher recommends the following:

  1. The central bank of Nigeria should find a means of monitoring the internal activities of financial institution mostly the job analyzed decryption and speciation rather than leaving such vital roles at the expense of appointed direct controls.
  2. Government should have a hand in selecting and recruiting of top management staff of the financial institution so that case of fraudulent should be dealt with properly.
  3. Central bank of Nigeria should remove or alleviate area of frustration in this sections to enable bank grow in numbers and also efficient operation of their activities.
  4. Central bank strike a medium between financial liberation and occasioned intervention aimed at correcting financial failure.

5.4 Suggestion for Further Research

To promote banking habit and efficient confidence in the system. The central bank should continue to maintain a public complaints disk at its head office and each branch should enable the public lodge complaint they may have against their bank. Where a case against any bank that is proved by the bank shall be required to make necessary amendment and pay appropriate penalties.

More so, the foregoing analysis from introduction of the study to this point is an evidence of the rapid growth of commercial banking sun-sector in Nigeria.

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