THE ROLE OF FINANCIAL INSTITUTION IN ENHANCING BUSINESS ACTIVITIES
(A CASE STUDY OF FIRST BANK OF NIG. PLC ENUGU)
Financial institution has contributed immensely to the development of the economy of Nigeria by enhancing and playing a significant role in the activities of business in the economy and also contributing to the different sectors of the economy.
In recognition of the important role of financial institutions in development of economy, this project work has been designed to enlighten all interested individuals who may not want to go into one business line or other on the availability of funds for them in any financial institution such as commercial banks like First Bank Nigeria Plc.
The more individual’s ventures into business line, the more developed the nations economy becomes because the development of any given nation is measured by the numerous business activities going on in the nation.
During the course of this study, book and journal were consulted to ascertain the extent to which these financial institutions have actually displayed its role in enhancing business activities and it was discovered that its contributions can never be over emphasized.
Despite the financial institutions achievements so far, recommendations were made to help the performances of these banks so that more people will use the banks available opportunities especially in the area of bank changes electronic banking card product, money transfer services both domestic and abroad, agriculture financial etc.
Background of the study
Statement of the problems
Purpose of the study
Scope of the study
Significance of the study
Limitation of the study
Definition of terms
The need for financial institutions
The way financial institutions has helped in
enhancing business activities
The influence of financial institutions
Area of the study
Population of the study
Sample and sampling procedure
Instrument for data collection
Validation of the instrument
Reliability of the instrument
Method of data collection
Method of data analysis
Data presentation and analysis
Presentation and analysis of data
Testing of hypothesis
Summary of result
Discussion, recommendation and conclusion
Discussion of result finding
Implications of the research finding
Suggestion for further research
Limitation of study
BACKGROUND OF THE STUDY
The stand of economic development is a total sum of all the effective and efficient business activities of the country either home or abroad.
There are vital roles, which the financial institutions have to play in this development. The survival and future of a given nation is hooked on the volume of business activities of that nation, also the availability of fund for financing the activities is necessary.
The main purpose of financial institution is to aid private individuals and government to finance their business projects. Financial institution could be seen as the pillar that causes business activities to progress.
There are financial institutions that deal with physical cash transaction, these institutions are known as banking system for example First Bank Nigeria Plc and there are non-banking financial institutions they complement the activities of the financial institution of business project. These institutions are known as non-banking system. Examples include National Providence Fund (NPF) financial companies, pension scheme, insurance companies, the corporative society, investment companies.
Furthermore, there are various markets that make up the financial institutions.
Foreign exchange Market: This type of market creates opportunities for foreign exchange for the benefits of investors in carrying out international business.
Liquid capital and money market: This is where long and short term lending and borrowing instruments are treated by the owners and users of fund.
Stock Exchange Market; In this market the share of the companies and declared for interested agents to buy. For the main reason for this study, the researcher will be writing on the banking financial institution but before limiting it to the case study, below is a short history of commercial banks in Nigeria.
COMMERCIAL BANKS IN NIGERIA (ORIGIN)
Banking business in Nigeria started in 1892 by African Banking Corporation, invited from South Africa. The bank was taken by British bank for West Africa in 1894 now known as First Bank of Nigeria Plc Barelays Bank now known as Union Bank of Nigeria Plc was established in 1917. The two expatriate banks dominated the banking industry or sector until 1933 when National Bank of Nigeria was established.
According to Nwankwo (1980), many indigenous banks were established between 1929 and 1952, but most of them failed dur to poor management, mal-administration, lack of training and motivation apart from low capitalization and stiff competition from foreign owned banks. Only three indigenous banks and two foreign owned banks survived that period. By 1952, the First Bank ordinance was introduced. It stipulated minimum capital base and locating for banks. Soyobo (1991) called the period that followed 1952 to 1959 the first banking boom era.
However, Nwankwo noted that no bank was established in Nigeria between 1962 and 1970, presumably because of the impact of regulations and the civil war (1967 – 1970).
The industry has twelve (12) Merchant Banks and 29 Commercial Banks in 1986, but by December 1990, there were 48 Merchant banks and 58 commercial banks apart from 5 development banks and the people’s bank established in 1989.
First Bank of Nigeria Plc was incorporated as a limited liability company in 31st March 1894 with head office at lever pool. It started business under the corporate name of the Bank of British West Africa (BBWA) with a predecessor, the African Banking Corporation that was established earlier in 1892. This lead to the prominent position, which the bank has to establish in the banking industry in West Africa.
For over a century, First Bank of Nigeria Plc has distinguished itself as a leader banking institution and a major contributor to the economic development of Nigeria.
In the early years of operations, the bank recorded an impressive growth and work closely with the colonial government in performing the traditional function of a central bank such as; issue of space in the West Africa sub-region. It was a progressive system that a branch was opened in Accra Ghana in 1896 so as to justify its West African coverage also in 1898, another branch was open in Freetown Sierra Leone. This operational system marks the beginning of the banks International banking operation.
And in 1900, the bank established second branch in Nigeria and was located in Calabar. Two years later the operation was extended to the Northern part of the Nigeria.
The bank has network coverage of 315 branches throughout the federation including a branch in the city of London and it maintains the largest branch network in the banking industry.
STATEMENT OF THE PROBLEMS
Banking is a long-term system of which expected funds are committed to enterprises to pay back within a period of time for about twenty years depending on the type of loan. But in the recent past, banks have failed to function effectively in this area and there have been several complaints such as frequent appointment of directors, habits, high staff turnover etc, this has also led many banks into distress, so the researcher wants to find banks into distress, so the researcher wants to find out the causes of the problems and proffer a suggestion.
PURPOSE OF THE STUDY
The sole aim of this research study is to identify the role of financial institution in enhancing business activities in the Nigerian economy, with reference to First Bank Nig. Plc Enugu Branch.
This research will draw down to the topic of the research work and the problems encountered in the nations economic development and as well recommend some possible solution to the problems.
To identify reasons for low lending habits
To ascertain their lending regulations and rates
To find out whether they have qualified staff as top management
SCOPE OF THE STUDY
This research work covers the specific roles financial institution plays in enhancing business activities in the country and its consequences on the economy of Nigeria using First Bank Nigeria Plc as a case study.
The questions to carry out the role of financial institution in enhancing business activities have brought about the following research questions.
To what extent has First Bank Plc gone to satisfy the needs of their customers in creation of bank deposits?
To what extent do banks give loans to their customers?
Do customers payback the loan as and when due?
What machinery are used in recovering the loans if not paid back?
What are the qualifications of managers handling the unit?
SIGNIFICANCE OF THE STUDY
This research work will help the entire economy especially business organizations, the government and other banks in their decision-making as well as help to improve their performance of business activities.
It will also go to a very great extent in helping those that have no knowledge of what banking is all about and all the students in higher institution who are inspiring to know about the subject matter.
DEFINITION OF TERMS
ROLE: Duty in an undertaking
FINANCIAL: Concerning money and finance
INSTITUTION: An institution is an organization established for social, educational, religious etc purposes.
PILLAR: Supporter of business activities or something
TRANSACTION: The act of carrying out business activities with somebody or an organization.
ACTIVITIES: Programme going on in a particular business
Ho1: First bank do not satisfy the needs for their customers in creation of bank deposits
Hi: First bank satisfy the needs for their customers in creation of bank deposits
Ho2 Customers do not pay back loan as at when due
Hi Customers pays back loan as at when due
Ho3: The extent of bank loan to customers is not encouraging
Hi: The extent of bank loan to customers is encouraging
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