CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The environment in which financial
transactions are carried out in the 21st century is an intertwined
force of complex socio-cultural, economic, political and technological factors
creating intricate challenges for financial institutions all over the world (Tesfayohannes,
2012). This growing complexity has created challenges for Nigerian financial
institutions as a study by KPMG (2012), titled ‘Confronting Complexity’
identified common factors in the Nigerian financial institutions among which
are the increased cost of business; greater number of risks; difficulty in
making financial decisions; delay in deals and transactions. George (2011),
succinctly captured the importance of socio-cultural realities on the practices
of financial institutions and revealed that considerable socio-cultural
difference exist between Nigeria and Great Britain making it difficult to
transfer practices in financial institutions from one area to another given the
trend in globalization, multi-nationalisation and internationalization of financial
transactions.
Socio-cultural realities remain an important
component of the practices in Nigeria financial institutions as they influence transactions,
technology and performance, (Odekunle, 1989; Olaoye, 2003; Aghalino, 1998;
Odetola & Ademola 1986).
However, rapid changes in the global banking
landscape such as technology, transport, trade, commerce, communication, are
currently affecting financial institution generally in Africa, who are
intrinsically attitudinal, and sedentary (Ekeledo & Bewayo, 2009).
Likewise, Aldrich and Zimmer (1986)
specify the importance of socio-cultural realities in the practices of
financial institutions in their transactions which they contend is entrenched
in social perspective. The socio-cultural aspect deals with the institutions,
norms, roles and values as they exist outside the individual financial
institutions and the latter captures the subjective aspect of culture as
demonstrated by individual‘s perception of the components of the cultural
system.
Cultural system can be likened to an
iceberg. The external or conscious as well as the internal or subconscious
aspect: where the former is the visible aspect that can be seen, such as
behaviour and some beliefs, while the subconscious aspect include that part
that is not seen, such as values and norms (Hall, 1976). Similarly, Hofstede
(2001) noted that human behaviours especially that of financial institution
managers and employee which is been focused in this study are influenced by
socio-cultural practice and some actions cannot be divorced from their
socio-cultural context (Bloodgood et al., 1995). Research and past studies
(Longenecker et al., 1989; Vitell et al., 2000) has revealed that most
financial institutions are embedded in unique circumstance and prone to social
and ethical issues.
Wetherly (2011) described the socio-cultural
variables as consisting of everything that is not contained within the economy
or political system. According to him, socio-cultural setting is made up of
collection of activities, and the relationships people engage in their personal
and official duties which include population features, age, ethnicity,
religion, values, attitude, lifestyles and associates. These environmentally
relevant patterns of behaviour lead to the creation of different cultural
values in different societies, some of which influence the decision in
financial institution. Therefore, culture, as distinct from political, social,
technological or economic contexts, has relevance for economic behaviour and organizational
performance (Shane, 1993; Shapero & Sokol, 1982).
1.2 STATEMENT OF THE PROBLEM
According
to previous studies, organizational performance and growth in terms of
profitability is not homogeneous across the world since certain geographical
area are more prone to business growth than the other. This argument is the
major reason why some financial institutions have the opportunity to grow than
the other. The most cited reason for higher organizational
growth in some regions or among specific ethnic group is luck of receiving
early colonial education (Olomi, 2009). Education has gone a long way in
influencing socio cultural believes of individual causing changes in their
attitude to banking services. Financial institution must therefore streamline
their practices to conform with these socio-cultural variables to ensure
optimum performance. However, the researcher is investigating the relationship
between socio-cultural variables and the practices of Nigerian financial
institutions.
1.3 OBJECTIVES OF THE STUDY
The
following are the objectives of this study:
1. To
examine the relationship between socio-cultural variables
and the practices of Nigerian financial institutions
2. To
identify the socio-cultural variables that can influence the practices of
Nigerian financial institutions.
3. To
examine other factors influencing the practices of Nigerian financial
institutions.
1.4 RESEARCH QUESTIONS
1. What
is the relationship between socio-cultural variables
and the practices of Nigerian financial institutions?
2. What are
the socio-cultural variables that can influence the practices of Nigerian
financial institutions?
3. What are
the other factors influencing the practices of Nigerian financial institutions?
1.5 HYPOTHESIS
HO:
There is no significant relationship between
socio-cultural variables and the practices of Nigerian financial institutions
HA:
There is significant relationship between
socio-cultural variables and the practices of Nigerian financial institutions
1.6 SIGNIFICANCE OF THE STUDY
The
following are the significance of this study:
1. Outcome
of this study will be a useful guide for management of financial institutions
and the Nigerian general public on the influence of certain socio-cultural
variables on the practices of financial institutions in Nigeria.
2. This research will also serve as a
resource base to other scholars and researchers interested in carrying out
further research in this field subsequently, if applied will go to an extent to
provide new explanation to the topic.
1.7 SCOPE/LIMITATIONS OF THE STUDY
These
study will cover the practices of financial institutions in Nigeria with a view
of identifying the effects of socio-cultural variables on the services of the
financial institutions.
Limitations of study
1.
Financial constraint- Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
and interview).
2.
Time constraint- The researcher will simultaneously
engage in this study with other academic work. This consequently will cut down
on the time devoted for the research work.
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