The Globalization Of Finance And Its Implication For Financial Stability (A Case Study Of GBT Bank And UBA Bank Plc)
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With a heart of gratitude, I submissively dedicate this project work to God Almighty the great provides and also to my lovely mother Mrs. Nwoke Joy who contributed in one way and the other to the success of this project work.
I wish to express my profound gratitude to God Almighty for giving me the strength knowledge, wisdom and understanding throughout my study.
This work describes one of the major challenges of the present globalization and its effects on the banking globalization is now increasing recognized as central to the growth of market economic for banking sectoral this represents both a demand as well as a new landscape of business opportunity. Several years ago, main part of the banks did not consider the globalization problems relevant for their operations. Recently the bank began to realize the major impact of the globalization our the way of creating the banking risk in the future.
The banking management in the context of globalization represent one of the challenges of these days. Staring from literature in the globalization field in this work focuses on several relevant issues related to banking management. Based on these finding the study recommends that banks in Nigeria should not relent in their foreign counterpart in doing business in order to increase their foreign earnings.
Bank should also spend more on information and communication technology since this has the capacity of increasing their profit. This information technology (IT) should be used to localize all the branches to a single branch networking. In spending more on information and communication and very small aperture terminal (VSAT) technology and interview banking VSAT technology apart from making possible voice and banking. We further recommend that more bank should be opened in foreign countries in order to increase foreign participation in home country’s banking.
Table Of Contents
- Title page i
- Approval page ii
- Dedication iii
- Acknowledgement iv
- Abstract v
- Table of contents vi
- 1.0 Introduction 1
- 1.1 Background of the study 3
- 1.2 Statement of problems 4
- 1.3 Objectives 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 Definition of terms
- 2.0 Literature review
- 2.1 Introduction
- 2.2 The evolution of globalization
- 2.3 The nature of financial globalization
- 2.4 The role of financial globalization and financial sector development in Nigeria
- 2.5 effect of globalization of the banking management
- 2.6 The role of central banks in a globalised financial system
- 2.7 The Nigeria banking reforms
- 2.8 Implication of financial globalization on the financial stability of deposit money banks
- 2.9 Challenges of financial globalization
- 2.10 Globalization and monetary policy
- 2.11 Risks and effects of globalization
- 2.12 Empirical review
- 3.0 Research design and methodology
- 3.1 Introduction
- 3.2 Research design
- 3.3 Sources/method of data collection
- 3.4 Population and sample size
- 3.5 Sample techniques
- 3.6 Validity and reliability of measuring instruments
- 3.7 Method of data analysis
- 4.0 Data presentation and analysis of data
- 4.1 Introduction
- 4.2 Presentation of data
- 4.3 Analysis of data
- 4.4 Testing of hypothesis
- 4.5 Interpretation of result
- 5.0 Summary, conclusion and recommendations
- 5.1 Introduction
- 5.2 Summary of findings
- 5.3 Conclusion
- 5.4 Recommendations
The globalization scene in the twenty first country has witnessed a resurgence of international banking and holistic integration of business transaction with little or no restriction. These according to Goldbery (20120 have occasioned a tremendous growth in the liberalization of banking operations across borders.
Though, the international monetary fund (IMF) (2010) sees globalization as the growing economic and social interdependence of countries through increased volume of cross border transaction and improved technology, therefore the financial operations of any nation significantly translates into the socio-economic status of the citizens Eboh, Okanya, Uma (2010) and Uma, Obidike (2013) argued that globalization has increased access to capital inflow, technological transfer and strong bargain for improved technical and managerial workforce.
Globalization does not only broaden the nation’s economic fortunes but also exposes the nation to stiff competition and efficiency through huge capital inflow capacity building and improved service delivery.
1.1 Background Of The Study
They have been different deductions about what globalization depicts. Some related it to the scientist perspective economic and social political perspective while some view globalization from the information technology aspect but globalization under this research work is viewed from the banking perspective.
On this note there are so many definitions given to globalization by different authors globalization can be seen as a process of integrating economic decision making such as. Consumption investment and savings all across the world this is a process of creating a global market in which all nations are forced to participate. In other words globalization is a process of expanding economic cooperation among states and this does not necessarily imply future breakdown of boarding.
Globalization can also be defined as the integration of national economies through trade and financial transaction. It is a process that has tended to reduce the ability of micro economic policy to achieved its objective without the due consideration of countervailing affects of competing policies adopted by other nations. The effects of globalization on the Nigeria banking performance has been the outcome of several factors among which are the increase in the volume of international trade and capital flows, technological improvement in the communication and data processing and the deregulation of domestic market for information and technology, telecommunication technology tends towards the building of strong Nigerian banking system.
In order to aid its efficient and effective performance especially with the new reform of recapitalization of twenty-five, billion naira (N25,000,000,000).
All over the globe foreign banks has entered into countries and added another dimension to a stiff domestic competition and in the process significantly affecting the structure of domestic banking markets. This is particularly evident in the united states. Old banks have captured growing share of key market Rose (2016).
The profiles of the foreign banks that have entered into joint ventures with Nigeria banks are intimidating. They have the capacity and potentials to restructure the banking system of any country. The strategic alliances between Nigerian banking and foreign banks and the increasing resources of Nigerian banks to foreign markets to raise capital fund are signs of movement towards the globalization large extent aid a magnitude level of great performance in the industry and of course tending it to greater height.
Furthermore, globalization has transformed the Nigerian banking performance in a profound way by altering the size and structure of the firms that comprise it. Major banks can now extent their branches network beyond national frontier or built strategic base in foreign national financial centers by acquiring either local banks or subsidiary banks. The network of financial connections among bank and other financial institution is now embracing the global world.
Globalization has not only transformed the Nigerian banking system and or aid its performance, but also has a positive impact on wholesale financial markets as evidence by blurring off the traditional barriers between commercial banking and investment banking and asset management motivated by the boom in equity and bond market in high yielding instruments and the wave expanded or introduced into the field of investment banking by engaging in security operations.
Also globalization is simply viewed as the gradual evolution of markets and institutions such that geographical boundaries do not restrict financial transactions globalization of banking in any economy means that domestic banks have opportunities to engage in banking.
1.2 Statement Of Problems
The problems which this project work is interested in finding answer to are centered on the following:
- That globalization has doubtfully performed up to the task in positively affecting the Nigeria banking industry performance through its role of financial liberalization that is the presence of foreign bank in a particular country and the establishment of the local banks subsidiaries in foreign counties to aid international financial transactions.
- To view how foreign bank participation is associated with a reduction in profitability non interest income and overhead expenses of domestic efficiency and competition into the domestic bank industry.
- To examine how increased participation of foreign banks in the domestic banking system has served as instrument of macro economic reform to recapitalize and rehabilitate troubled banks outside the boost inefficiency and competitiveness of market operators.
- Also foreign banks entry into the domestic market heightened competition this might result to and worry that foreign banks will take away their business. But financial globalization has made it possible for innovation to spread quickly around the world. Those who skillfully adapt international best practices to local condition are most likely to succeed.
- And to know how globalization aids or facilities integration between both foreign and domestic financial institutions in the world and in particular, how globalization of banking in Nigeria has aided the domestic banks in raising capital in the international markets.
1.3 Objectives Of The Study
The major objective of this research wok is to examine the role of globalization end its implication on financial stability of banks in Nigeria, and the specific objectives of this study will be listed as follows:
- To examine how globalization has widened domestic banks marketability
- To examine the impact of globalization of finance on the financial stability of bans in Nigeria.
- To examine the effectiveness of the Nigeria banking system strategies in coping with the world competition.
- To examine critically, the impact of globalization on the Nigerian banking performance.
- To compare and contrast the experiences of the advance countries financial performance under globalization with that of domestic financial performance
- To appraise policy measure of government towards ensuring Nigeria banks benefit from globalization.
- To find out the extent foreign banks has penetrate Nigerian banking system.
1.4 Research Questions
For some of the objective of this study to be realized certain hypothesis must be stated and tested and then must be prelude by some questions. The following questions will be addressed in the course of this research work.
- To what extents has globalization of finance wideness domestic banks marketability?
- Is there any impact of globalization of finance on the financial stability of banks in Nigeria?
- Is there any effectiveness of the Nigerian banking system strategies in coping with the world competition.
- What is the impact of globalization on Nigeria banking performance?
- What are the similarities and difference between the experiences of the advance countries financial performance under globalization with that of domestic financial performance i.e Nigeria?
- What are the policy measures of government towards ensuring Nigeria banks benefit from globalization?
- To what extent has foreign banks penetrated Nigeria banking system?
1.5 Research Hypothesis
The conjectural statement of this research work in respect of the research question are as follows:
- Ho2: Globalization has no impact on the Nigerian banking performance
HA: Globalization has impact on the Nigeria banking performance.
- Ho: There is no impact of globalization of finance on the financial stability of banks in Nigeria.
Ho: There is an impact of globalization of finance on the financial stability of banks in Nigeria.
1.6 Significance Of The Study
The study shall serve as a reference point to students of banking and finance bank practitioners and policy formation in banking industry.
Through the study the inefficiency that exist in the banking operation are thrown opened to the public and researchers in the discipline. It also helps to understand how globalization could bring efficiency in services delivery to customers through the introduction of modern technology into banking operations.
Through the study, one shall be able to know why GTB bank Nigeria through the adoption of new technologies in its operations.
Furthermore, the end result of this research work would be germane and or imperative to academicians investors, financial institutions as well as the government who may be interested in making use of the information’s available there in. however, it will as well widened the knowledge and or the understanding of the generality of the people on how globalization policies positively or negatively influence their day today business operation and management.
Finally, it is as well important to note that, at the end of this study, reasons for the prevailing attitude of banks in Nigeria towards globalization through their performance appraisal would be known.
1.7 Scope Of The Study
The concept of globalization is so broad diverse and significance to the socio-economic scene of every nation. This study shall focus on the effect of globalization of finance end its implication on the financial stability of banks in Nigeria.
For the purpose of emphasis the research shall empirically focused on GTB banks, Plc and its profitability profile for the period of 2011-2017.
Finally, the nation’s economy shall be x-rayed. Using two variables such as foreign direct investment and gross domestic product and how the duo have affect banking operations in Nigeria.
1.8 Definition Of Terms
Globalization operationally is the mechanism of global economic, political and cultural integration. Banking operations operationally, encompasses all activities carried out by commercial banks in order to maximize growth profitability and economic survival.
2. Foreign Direct Investment:
foreign direct investment operationally, is an investment in a business by investor from other nations.
3. Gross Domestic Product (Gdp):
Gross domestic product operationally, is the variable used to measure the economic health of the nation as well as the living standard of the citizens.
This implies to combine parts into whole. In this study integration means the combination of globalization and the Nigerian banking system to aid efficient performance.
This refers to the freeing of trade investment and capital follows between countries.
A bank is being defined as any institution which is carrying on the business of banking like, taking deposit, making payment and lending.
7. Financial Market:
This is a composition of institutional arrangement that facilitates the intermediation of funds.
It is defined as the study of the way in which national resources are used and how wealth they produced are divided and the application of the principles to the need and property of the society (LEZSON WEBSTER).
It is a bank business whose principle operations are concerned with the accumulation of the temporary, idle money of the public for advancing some to other for expenditure.
10. Bank Transfer:
Is a method of making payments in which payment made at any branch of any bank for the account of a payee with an account at any branch of the same bank.
11. Hedges Fund:
It is a fund used to eliminate or reducing risk by undertaking a countervailing transaction.
12. Multinational Trade:
A trade that comprise of several countries.
13. Financial Stability:
This is when there is a financial equilibrium in the economy and thus resistant to change.
14. Interest Rate:
This is the cost of borrowing or effective makes price
The recapitalization process whereby two or more banks merged so as to arrive at a capital base of twenty five billion or more.
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How to nail it on the head during your project defence
You are through with writing that project. Now what?
You have found yourself at that point where you have to defend what you have written. Of course you have to stand in front of your supervisor and other literary personalities to prove that you know what you wrote in your project paper. Unfortunately, the more you think about it, the more it looks like you are about to face a legion. It is not a war. But the emotion of dread welling up inside of you makes it look like one. So now you are asking yourself questions.
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Watch Your Body Language And Keep It Confident:
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Dress In Your Most Comfortable And Impressive:
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Speak With Authority:
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Use, Your Gestures:
I have often found this to come to my rescue in dealing with shyness and conveying my confidence. Usually it gives you an edge to also drive home your point. You must, however, ensure that you do not over use it. It doesn’t mean that your hands should be flying all over the place. That would be absolutely unnecessary. If you do this well, after a while you will realize that you are not as self-conscious as you used to be at the very start. For most situations, it would have completely disappeared altogether; leaving a really confident you talking.
Have A Good Opening And Closing Line:
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Make Sure You Know Your Work:
Certainly you should understand how important it is to know your own work from start to finish. Not having in-depth knowledge of your own work is tantamount to a suicide mission. Why should you kill yourself?
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Prepare For The Questions:
Now this part is truly essential. You must be sure you do not floor all the good work you did on your presentation by not answering correctly. You must pay attention to the questions you are asked to be sure you will give the right answer. Many people get it wrong at this stage and spoil their good presentation. When you do not understand any question do endeavour to ask the person to expatiate what they mean before you answer.
These tips are by no means exhaustive, but applying these tips will give you some necessary advantage you need for a great outcome. Of course that outcome would mean that you eventually earn all your points on this project.
The structure of a good project work
Undergraduate projects in Nigeria is a prerequisite for graduation amongst Nigerian tertiary students who will which to obtain bachelors degree in their respective courses of study such as accounting, banking and finance, business administration and a host of others. Writing an undergraduate project in Nigeria for final year students entails a lot both financially and otherwise. Being able to develop any final year project depends on getting a researchable topic whether it is Accounting Undergraduate project topics, Banking and Finance research topics or banking and finance project topics and materials and it all requires diligent hard work of students who are willing to develop best undergraduate projects in Nigeria and graduate in flying colors.
A typical Undergraduate project in Nigerian tertiary institutions can be said to be divided into five or six chapters depending on the format of the school and course of study which are
The introduction of an undergraduate project states the main research problem and research argument. What precisely the study is all about and why it is important. It looks at the originality of the research work and how it will fill the gap in other studies. Justification for a research undergraduate topic should not be lengthy before it has been explicitly stated.
Below are the contents in chapter one of an undergraduate research project which includes;
- Background of the study,
- Statement of the problem,
- Objectives or aims of the study,
- The research questions,
- Research hypothesis,
- Significance of the study,
- Scope of the study,
- Limitations of the study and
- Operational definition of terms.
2. Literature review
Literature review of any undergraduate research work, be it business administration project topics or Economics project topics just to mention a few is very critical to securing a high grade in one’s project work. The literature review of a research process uncovers what other writers have written about the student’s topic. A student’s undergraduate research work should include a discussion or review of what is known about the subject and how that knowledge was acquired. The review could conclude with a brief summary of the literature and its implications. The contents of the literature review are the theoretical review, conceptual framework, empirical review and summary of literature review.
3. Research Methodology
This section includes a description of the research methods used in the undergraduate research work such as the sample size, data collection methods, measurement instruments, research data analysis procedures and the population from which the sample was selected. This section also describes the method used in selecting the sample or samples, validation and reliability of the instruments used in the research work. There are different research statistical techniques used in undergraduate research work such as SPSS, e-views etc.
4. Results & Discussion
This section presents and discusses the data analysis results used in an undergraduate research work, the results of each analysis is being summarized, tabulated, and then discussed for each research question. Then for each research hypothesis, the statistical test of significance selected and applied to the data is briefly described, followed by a statement indicating whether the hypothesis was supported or not supported. In presenting the result analyses/summary in an undergraduate project tables and figures and or graph are used to add clarity to the presentation.
5. Summary, Conclusions And Recommendations
This section summarizes the findings of the study in an easy to understand manner. It also explains the practical implications of those findings, and points to recommended directions for future research in that area.
This is where every source cited in the undergraduate research work is being included. Every undergraduate research work must be properly referenced for its authenticity.
Choosing A Good Project / Research Topic
Students in Nigerian universities these days wish to choose a very simple project topic/material. There is no issue choosing a simple project topic; the only problem is your ability to choose a good project or research topic that your supervisor will easily approve for you.
Most project supervisors really want to see how good his or her project student understands his or her surrounding through the kind of topic he or she chooses for their project work.
There are some project topic that are not reject-able; for instance in Nigeria of today; what do you think is the major issue on ground now?
If a project student can choose or craft a topic on the effect of dollar increment on the economy of Nigeria. Such project topic will be very interesting to write on.
Now what are the qualities of a good project topic?
- The materials for the project topic must be easily assessable.
- The project topic itself must be meaningful.
- The variables must be able to give a clear aim of the project topic.
What do I mean by variable?
Well I am deriving my point from the area of ; the variables here are those main words in the project topic.
Like the above project topic; the effect of dollar increment on the economy of Nigeria. You can see the main variables that really define this project topic are:dollar, increment and economy.
Before you present your topic to your project supervisor, first of all understand your project topic, and then secondly try to do some research for your topic to see if at least you can get up to 60% of what you need to write the complete project.
I said that above because you might have a very nice topic that the materials are not available online and there are no books as regard the topic; in this case the project topic becomes difficult for you even though the topic is catchy.
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Well what I mean is very simple and easy to understand. Simply pick your project topic, type it on google and see if you will have at least a good background for the topic you are writing on.
If you can have a good background for your project topic and you can understand the problem associated with the project topic, then I believe the aim of the project is not far-fetched.