ABSTRACT
The banking system and financial institutions is one of the fastest
growing and developing sectors of paramount importance in the Nigeria
economy. The role of the various banking ad non-banking financial
institutions in the provision of different types of industrial and
agricultural finance are fully appraised.
In examining the role of financial institutions in economic
developments, the following theoretical concepts usually constitute the
focus of attention, namely;
1. The domestic mobilization of financial resources is essential for capital formation and accelerated growth.
2. An efficient allocation of available resources is of importance in the development process.
3. Financial institutions offer an efficient
institutional mechanism through which resources can be mobilized and
directed from less essential uses to more productive investment.
The role of financial institutions in Nigeria is so crucial in the
economic emancipation, as such roles help the economy of developing
nation find its real position in the world economy and improves the
standard of living of such nation.
The researcher tried to examine the adequacy and relevance of the
institutions and the structure of the financial system of meet the needs
of the economy for rapid development and also to know whether they play
the role for which they were established.
In order to write the project, research was done on some of these
banks and financial institutions like central bank of Nigeria,
commercial banks, merchant banks and development banks.
Finally, the researcher also carried out thorough investigations to
show all the claims of some financial institutions and hence
recommendations were made.
TABLE OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Table of contents
Abstract
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
1.2 Statement of the study
1.3 Objective of the study
1.4 Significance of the study
1.5 Scope of the study
1.6 Definition of terms
1.7 Research questions
CHAPTER TWO
2.0 Review of the related literature
2.1 The structure of the Nigerian financial system
2.2 The concept of economic development
2.3 Financial services
2.4 Problems and prospects of banks in Nigeria
CHAPTER THREE
3.1 Research design
3.2 Area of study
3.3 Population of the study
3.4 Sample and sampling procedure
3.5 Instrument of data collection
3.6 Reliability and validation of research instrument
3.7 Method of data collection
3.8 Method of data analysis
CHAPTER FOUR
Presentation and Analysis of Data
CHAPTER FIVE
5.0 Discussion, recommendation, conclusion
5.1 Discussions of findings
5.2 Recommendation
5.3 Limitations of study
5.4 Conclusion
References
Appendix
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The idea of establishing financing institutions was mooted soon after
the establishment of the central bank of Nigeria on first July, 1959
after the bank failures of the early 1950’s. At this stage, it became
obvious that there was an urgent need to establish financial
institutions capable of providing medium and long-term capital to full
up the serious gaps in the financial system of the economy.
In view of the dwindling position of the economy the
government has at various times tried to correct through monetary and
fiscal policies the downward movements of the economy as well as to
place the economy on a path of meaningful development.
Owing to the important roles agriculture and manufacturing sectors
are expected to play in the economic development the government
introduced a lot of policies to encourage production in these sector for
example, the stipulated sectoral distribution of loans to agriculture
and manufacturing sector (preferred sectors) has been increasing over
the years. The government executes the monetary policies through the
banks of which commercial banks are the key players.
Generally, we know that the financial system of any society (of which
the banking system is undoubtedly the most dominate), is the frame work
within which capital formation takes place through intermediation of
the institution. The participants in the banking system mobilize
resources from the surplus units and channel some to the deficit
economic units of any country for industrialization.
The banking and financial system is also required to stimulate
investment, and channel such to the priority areas of the economy, thus,
it acts as a transmitter of government economic policies for growth and
development through its social responsibility. This industry is a
force to reckon with in the area of employment. Banks set apart
handsome portion of their annual profits to finance worthy ventures that
have spill over effects on the development efforts of the government or
their local communities.
With the support and encouragement of the international bank for
reconstruction and development (world bank) the first indigenous
development financial institution was established in January, 1964 in
the name of the Nigeria industrial development bank (NIDB). The
establishment of this bank in January 1964 was foreshadowed by the
incorporation in 1959 of a private investment company, the investment
company of Nigeria (ICON) as an industrial financial company with the
aim of providing long and medium term finance for industry.
1.2 STATEMENT OF THE STUDY
This research entitled “the role of financial institution in the
development of an economy” attempted to determine the role of financial
institutions in enhancing the economic development Nigeria, with
particular reference to some premier financial institutions like the
Nigerian Bank for Commerce and Industry (NBCI) and the Nigeria
Agricultural and Co-operative Bank (NACB) and banks. These two
financial institutions were chosen as representatives of the development
in financial institutions because their role is envisage to be a
representative of role played by other financial institutions in
economic development for Nigeria.
1.3 OBJECTIVES OF THE STUDY
The main objective here is to examine the functions of the financial
institutions and assess their impact on the economic growth and
development of Nigeria. To be able to appreciate properly these
developments, however, we need to examine the ownership distribution of
the institution in the system, the structure of the system and the legal
and regulatory framework within which the institutions operates.
This study also tried to ascertain how much of the objectives, the
financial institutions and banks have been able to achieve their
standing relationship with the Nigerian Public and the Central Bank of
Nigeria (CBN).
The research will almost inevitably chose with a look into the future
of the financial system its responsibilities and its role in the
Nigerian economy of tomorrow and therefore suggest likely ways of
solving the problem.
1.4 SIGNIFICANCE OF THE STUDY
The study of the role of banking and financial institutions in
Nigeria is indispensable and equally significant because this role will
not only enhance the economic growth of the Nigeria nation but will also
improve the standard of living of the people as it directly and
indirectly creates job opportunities for the teaming populating of the
army of unemployed in the country. The role of financial institutions
is equally worth studying because of its unique position as being solely
responsible in determining and launching the nation into a vibrant
economy.
The study is equally significant to the generality of Nigerians since
this research reviewed the role of the financial institutions in
meeting their primary objective as well as other objective with a view
to improving the economic position of Nigeria.
This study also reviewed the primary role of these institutions which
included among other numerous functions “providing equity capital and
funds by way of loans to indigenous persons, institutions and
organizations for medium and long term investments in industry and
commerce at such rates and upon such terms as many determined by way the
broad in accordance with the policy directed by the federal executive
council”.
This study is equally significant in that it has reviewed the activities of the Nigeria.
Financial institutions in trying to close those gaps created by the
operations of the financial institutions and speed up economic
development of Nigeria.
This research will hopefully be of importance to any developing
nation hoping to establish financial institutions to help speed her
economic development since it has highlighted the role and functions
such institutions play in economic development.
1.5 SCOPE OF THE STUDY
The research is centered on the periods between 1990 and 1993. This range has been adopted because of availability of data.
This researcher entitled “the role of financial institutions in the
development of an economy” is very vast but for purpose of financial
constraints, availability of material and time.
It has therefore restricted or limited itself to some premier
financial institutions like the Nigerian bank for commerce and industry
(NBCI) and the Nigerian Agricultural and Co-operative Bank (NACB) and
banks. These two financial institutions were chosen as representations
of the development financial institutions because their role is envisage
to be a representative of role played by other financial institutions
in economic development of Nigeria.
1.6 DEFINITION OF TERMS
1. Role
‘Role’ should mean and all parts played and exhibited by financial institutions in the development of Nigeria economically.
2. Financial Institutions
This means and includes bank and non-bank financial
institutions that are involved in the economic development of this
nation solely.
3. Economy
In this research, economy refers to the control and
management of the money, goods and other resources of the Nigerian
society with regards to the improvement of the standard of living of the
people.
4. Population
This can be referred to as the number of elements in a research
study that the researcher has access to for the purpose of gathering
data. It is gotten out of a universe.
1.7 RESEARCH QUESTION
1. Does your institution play any role in the economic development of Nigeria?
2. If yes what are the role(s)?
3. Have your institution some area(s) of priority?
4. If yes is increased rural banking among your priority?
5. What are the roles of the insurance sector in the economy?
6. Do you think that the overall objective of establishing the
institution tends towards meeting the political and economic needs of
the country?