CHAPTER ONE
INTRODUCTION
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 CONSTREINT: 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.
REFERENCES
Alashi S.O (1991).”the implications of current monetary policy on
safe nd sound banking practice to ensure stability in the industry”.
NDIC Quarterly, vol. No 3 September 1991.
Awoke M.U
Ahudolie E.F.
Ohuche F.K.
MACKINS S.I.O
ORITA L.I. Economics for the millenniums first edition 2000. ISBN 978-35425-2-4
Willy nnamani Research Appreciation. (2003) ISBN 978-37068-2-9 First Edition 2003