+234 813 0686 500
+234 809 3423 853
info@grossarchive.com

EVALUATING THE IMPACT OF BANK DISTRESS ON THE PROFIT GROWTH OF COMMERCIAL BANKS (A CASE STUDY OF SELECTED COMMERCIAL BANKS)

  • Type:Project
  • Chapters:5
  • Pages:59
  • Methodology:Chi Square
  • Reference:YES
  • Format:Microsoft Word
(Banking and Finance Project Topics & Materials)
EVALUATING THE IMPACT OF BANK DISTRESS ON THE PROFIT GROWTH OF COMMERCIAL BANKS
(A CASE STUDY OF SELECTED COMMERCIAL BANKS)
CHAPTER ONE

1.0    INTRODUCTION
1.1    BACKGROUND OF THE STUDY
In any modern economy, the efficient production and exchange of goods and services requires money and bank is the instrument for affecting it. The last few years have been both traumatic and revolutionary for the banking industry. The industry produced the largest number of technically insolvent and under capitalized banks. The magnitude of distress in the nation’s banking industry reached on unprecedented level making it an issue of concern to the government, the regulatory authority, the bankers and the general public.
The Nigeria banking scene was characterized by changes designed to promote banking in the country. The changes may be categorized into phases, but due to the nature of work, we will consider tow phase namely; the era of laissez – fair banking (1834 – 1952), the era of limited was monopolized by foreign banks, principally the African banking corporation which was the precursor of the (BBWA) British bank for West African the present First Bank of Nigeria, the Barclays bank DCO (Dominion Colonial and Overseas) the present day Union Banks, and the British and French Bank, the for – runner of present United Bank of Africa. Although, discrimination against Nigerians by these banks led to the establishment of some indigenous banks which unfortunately offers litter or no competition to the foreign banks essentially because of their weak capital base or poor managerial capacity. Consequently, all but three to the indigenous banks failed. The survived includes the National Bank of Nigeria established in 1933, the Agbonmagbe Bank (now Wema Bank) established 1945 and the African Continental Bank 1947.
A commission of inquiry headed by G.D. patron set up in 1948 to investigate the business of banking in Nigeria. Their report led to the enactment of the first banking legislation in Nigeria, the banking ordinance of 1952. The 1952 ordinance laid down the standard and procedure for the conduct of banking business by prescribing the mandatory minimum capital requirement for the banks both expatiates and indigenous regulations to Ʃ100, 000 and Ʃ12,500 respectively and it is also introduced regulations to check bank failure. However, the entire indigenous bank established in the country during this period also all failed. The bank failures of this era were attributed largely to the monopolistic structure of the banking industry, which allowed the foreign banks to enjoy exclusive patronage form British firms. The indigenous banks that survived were able to make it because of the support they got from their state government.
The distress phenomenon in Nigeria banking industry is of recent origin. The manifestation became discernable with some policy shocks staring 1988 with Central bank of Nigeria (CBN) directive to banks that naira backing for foreign exchange application be lodged with CBN. This was followed in 1989 by another directive requiring public sector deposits to be transferred to CBN. These two directives exposed the precious liquidity position of some banks and the distress they have subterraneous harbored. What was thought to be a temporary liquidity problem for few banks soon catches up with a lot more banks.
It is important to stress in this work that banking system was already in distress by the time NDIC was established. By them, 7 (seven) banks were known to be technically insolvent. The government at that time, did not embark upon a clearing exercise that would have removed from the system that distressed institutions because it was feared that such an action would lead to loss of public confidence and flight of foreign capital more so there was no deposit insurance institution to expeditiously manage such bank closures. The NDIC was nevertheless required to insure all banks. That means that the corporation has been involved in managing distressed banks even before it could settle down and minister enough resources for this important task.
The intermediating role of banks and their relevance both in the transmission of monetary policies and in the payment system underscore their importance as well as the problem that bank distress at the prevailing dimension in our economy could precipitate. Arising from their intermediation, banks generate financial resources and put these at the disposal of deficit economic growth in the form of increased output. Therefore, an industry wide insolvency of banks, such as the one experienced in Nigeria, should be expected to retard the economy’s rate of capital formation, reduce its level of employment and output and ultimately the pace of economic growth.
1.2    STATEMENT OF THE PROBLEM
A serious problem posed by widespread distress among banks is the threat to banking habit and the development of an inefficient payment mechanism. The loss of confidence, the after math of the distress that hit the banking sector forced several businesses to take fewer risks by taking back their fund to well established safe havens dominated by older generation banks.
This research work is therefore concerned with “Evaluating the impact of bank distress on the profit growth of commercial banks”, using (A vase of selected commercial banks).
1.3    PURPOSE/OBJECTIVES OF THE STUDY
The main purpose/objective of this study is to have an overview of the effect of bank distress on the profit growth of commercial banks. Investigate into the reasons for bank failure in Nigeria.
Other objectives include:
To evaluate the cause of bank distress in Nigeria. To find out the impact.
To find out the possible prevention strategies or failure resolution options of bank distress.
1.4    RESEARCH QUESTIONS
What are the causes of bank distress?
What is the impact of bank distress?
What is the profit growth rate of commercial bank during distress?
What are the effects of bank distress?
What are the possible solution options to this phenomenon in the banking scene?
1.5    RESEARCH HYPOTHESES
H1:    Distress has no effect on the average profit of commercial banks.
H0:    Distress has effect on the average profit of commercial banks.
1.6    SIGNIFICANCE OF THE STUDY
This research project will be of importance of the following persons:
New generation banks, which may wish to know the implication of banks distress in the banking industry and how to restore the confidence of the customers and uphold efficient payment mechanism.
Nigeria Deposit Insurance Corporation: The work could be of immense help to NDIC in the area of distress management and prevention strategies. And also, in the area of failure resolution option in banking industry.
Students who may wish to know the extent of distress in the banking industry and the trend of distress as it affect the modern banking will also benefit from this bank.
1.7    SCOPE, LIMITATIONS AND DELIMITATIONS
While the banking impact distress in Nigeria will theoretically serve as the population of study. The project is designed to appraise the impact of bank distress on the profit growth of First Bank of Nigeria. It will also analyze the trend of this bank profit within a period of 3 years (2011 – 2013).
1.8    DEFINITION OF TERMS
DISTRESS: It can be defined as an extreme suffering caused by lack of money or a state of danger, calamity and misfortunate acute poverty.
EVALUATION: This can also be defined as form of idea or judgment of something and also to work out something in numerical value.
IMPACT: This can be defined as a strong effect or impression to bank. It is also a situation whereby something will be to be press closely or firmly together.
COMMERCIAL BANK: Commercial bank or business bank is a type of bank that provides services, such as accepting deposits, giving business loans and basic investment products. Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposit and loans from corporations or large businesses, as opposed to individual members of the public (retail banking).

EVALUATING THE IMPACT OF BANK DISTRESS ON THE PROFIT GROWTH OF COMMERCIAL BANKS (A CASE STUDY OF SELECTED COMMERCIAL BANKS)
Share This

Details

Type Project
Department Banking and Finance
Project ID BFN0385
Price ₦3,000 ($9)
Chapters 5 Chapters
No of Pages 59 Pages
Methodology Chi Square
Reference YES
Format Microsoft Word

500
Leave a comment...

    Details

    Type Project
    Department Banking and Finance
    Project ID BFN0385
    Price ₦3,000 ($9)
    Chapters 5 Chapters
    No of Pages 59 Pages
    Methodology Chi Square
    Reference YES
    Format Microsoft Word

    Related Works

    CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE STUDY In any modern economy, the efficient production and exchange of goods and services requires money and bank is the instrument for affecting it. The last few years have... Continue Reading
    PROPOSAL The topic “Evaluating the Impact of Bank Distress on the profit Growth of Commercial Bank, (A case study of selected Commercial banks) The Topic “Evaluating the impact of Bank Distress on the Profit Growth of Commercial Banks” is posed to appraise the effect of distress on the profit growth of commercial  banks. It measures the way... Continue Reading
    (A CASE STUDY OF SELECTED COMMERCIAL BANKS) ABSTRACT This work “Evaluating the impact of Bank Distress on the profit growth of Deposit Money Banks. The causes of bank distress in Nigeria and the possible prevention strategies or failure resolution options of bank... Continue Reading
    (A CASE STUDY OF SELECTED COMMERCIAL BANKS) ABSTRACT This work “Evaluating the impact of Bank Distress on the profit growth of Deposit Money Banks. The causes of bank distress in Nigeria and the possible prevention strategies or failure resolution options of bank... Continue Reading
    THE IMPACT OF NEW PRODUCTS ON THE PROFIT PERFORMANCE OF COMMERCIAL BANKS IN NIGERIA (A CASE STUDY OF FIRST BANK PLC SUBMITTED) ABSTRACT This study is set out to investigate the response of the Nigerian Commercial Banks to the need for innovation (through the introduction of new products service) for the enhanced improvement in their profit... Continue Reading
    SPIRAL GROWTH OF BANKS IN NIGERIA. MANPOWER PROBLEMS AND SOLUTIONS. (A CASE STUDY OF A SELECTED COMMERCIAL BANK IN DELTA STATE). ABSTRACT A research into the spiral rgowth of banks in Nigeria: manpower problems and solutions, cannot be over emphasized. In pursuance of this investigation the researcher formulated four research objectives, utilized... Continue Reading
    CHAPTER ONE INTRODUCTION BACKGROUND OF THE STUDY In Nigeria, Commercial Banking dates back to 1894 when the Bank of British West Africa (BBWA) was established. Since then, the general concept of the Nigerian Commercial Banking has changed... Continue Reading
    ABSTRACT This research is a study aimed at finding the main causes of customers of commercial banks to be prompt wherever they are in their current or saving accounts or withdrawing cash from their savings account balances or cash cheque in their current account balance. Consequent upon this, it will determine the impact balance of the... Continue Reading
    THE IMPACT OF ORGANIZATIONAL STRUCTURE OF COMMERCIAL BANKS ON EFFICIENT CUSTOMER SERVICE IN NIGERIA (A CASE STUDY OF FIRST BANK PLC) ABSTRACT This research is a study aimed at finding the main causes of customers of commercial banks to be prompt wherever they are in their current or saving accounts or withdrawing cash from their savings account... Continue Reading
    ABSTRACT Monetary policies are a stabilization weapon used to regulate the value and cost of money in the economy, it is important for Central Bank of Nigeria to promote stability and a sound financial... Continue Reading