The Implications And Remedies Of Banking Failures In Nigeria

Project and Seminar Material for Accountancy / Accounting

The Implications And Remedies Of Banking Failures In Nigeria

Chapter One


1.1 Background Of Study

Banks are generally recognized and accepted to be a body that play a catalytic role in the process of economic growth and development. In any society, they are the

The brain of economic stimulation and growth. When there is bank failure in any economy, such economy is terribly affected.

Bank are the holders of the bulk of the nations monetary supply. This is becoming increasingly so as the public awareness of the services of banks increase and as the physical presence of banks rises throughout the country. Because of the supply of money and credit needs, banks no doubt occupy of any country.

According to Alashi S.O (1991). Empirical evidence exists which suggest a positive correlation between real economic growth and bank assets, and between money supply, bank assets and economic development.

Banks failure and associated run on banks limit the ability of banks to create. Money, jeopardize the payment mechanisms and disrupt bank-lending activities (Nyong 1995).

1.2 Statement Of The Problem

Every country attempts how to maintain a healthy financial system because of its impotence in economic growth and development of the bank failure in the society.

There is bound to be a serious problem in that society.

From the beginning of banking in Nigeria there have been serious crisis of bank failure in the industry. This no doubt constitutes a set bank in our quest for economic growth and development. Such a situation should not be allowed to continue. To this effect there is need to investigate the causes of bank failure as the logical step towards formulating realistic policy to arrest the trend.

1.3 Purpose Of Study.

The purpose of this study is to focus attention on the problem of bank failure in Nigeria which is threatening to hamper the resumption of sustain economic growth and development of the Nigeria economy. To this effect the major objective of this study is to:

  1. Identify the causes of bank failures in Nigeria
  2. Formulate a model to identify failed banks
  3. Provide policy suggestion to minimize the occurrence of bank failure in the country.

1.4 Significance Of Study

The significance of this study is to achieve a great success in contributing the little the research can, if not a great deal in solving the bank failure problem in Nigeria which will in turn being about an immense change in the Nigeria banking sector with particular reference to standard trust bank Enugu

It is as well hope that this research work will definitely enlightening the staff and management of banks especially standard trust bank enugu. In addition it will bring about more profitably contributions and improvement to every order banks nation wide to know their problem and locations, further more, this study will serve as means to tackle most of the inherent problems effectivel7 again it will help the society of large in the evens or to be as a favorably side of the failure syndrome on Nigeria banks is eradicated completely.

Finally though the researchers restricted the study to Enugu state and standard trust bank the result of findings will be of means benefit to all banks in Nigeria as well as students conducting similar research on the same topic or related one.

1.5 Limitation Of Study

during this research, there were some problems that stumps up and some of them are as follows:

1. Financial Constraint:

As a student the fund available was not enough in transporting and fact findings and all so for borrowing of necessary literature that would have help in the wring of this research work.

2. Management Constraint:

The study should have included more banks in the sample but for the on availability or data from more banks, secondly the data used are less than accurate sense the represent information for the public which may not the actual the same with the situation of ground in the banks.

1.6 Definition Of Terms:

Bank Failures:

According to Eugene and Louse (1985) they are five different types of failures these are , economic failure, business failure, ;technical failure or insolvency, in bankruptcy and legal bankruptcy. The world failure according ozogn(1984) means to be unsuccessful l in attempt ;at achieving any set objectives or aspiration it could be also mean the inability, refusal, forth or weakness which prevent achievement of any set objectives or aspiration.

Within the conduct of this write up therefore, one could explain bank failure at the aim ability to the bank to meat up with its obligation to its customers. owners and economy as a whole should be noted so as to not to be identified with failing banks.

Economic Growth:

Economic growth means the increase in quality of goods and services that equally increases and national income. Growth does not consider or involved overall change in the structure of the society. It is worthy of note that economy may be growing yet but not maturing (developing)

Economy Development:

Economy development means sustained changes in an economic leading to cumulative increase in real income per capital, increase in supply of improve factors of production, improvement in allocation of factors such that every factors is used effectively, equitable distribution of incomes, development of efficient administrative and political systems , improvement of efficient in social of economy infrastructures , provenance of political and social stability and sectional balance in development.

The Implications And Remedies Of Banking Failures In Nigeria

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