ABSTRACT
The paper examines interaction between
financial development and economic growth in Abia State. The study highlighted
to analyze practically the developmental roles of financial institution in
economic development of Abia with Ministry of economic development, Umuahia as
the case study. It was organized into five chapters to ensure systematic
approach to the issue. Chapter one presents background of the study, statement
of the problems, objectives of the study, research hypothesis, significance of
the study, limitation and scope of the study and definition of terms used.
Chapter two presents literature review based on the contributions of other
authors in issues related to the subject matter. Chapter three presents the
study design and procedures which include: sources and tools for data
collection and analysis, population and sample size, questionnaire design and
interpretation of data while chapter four presents analysis and interpretation.
Chapter five present summary, conclusion and recommendations. Finally, the
study present the financial institutions have been regarded to be the core area
of economic development.
TABLE OF
CONTENTS
Title page
Cover page
Certification – – – – – – – – i
Dedication – – – – – – – ii
Acknowledgement – – – – – – – iii
Abstract – – – – – – – – – iv
Table of contents – – – – – – v
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study – – – – – 1
1.2 Statement of the Problems – – – – – 4
1.3 Objective of the Study – – – – – 4
1.4 Research Hypothesis – – – – – – 5
1.5 Significant of the Study – – – – – 6
1.6 Scope of the Study – – – – – – 7
1.7 Limitation of the Study – – – – 7
1.8 Definition of Terms – – – – – – 7
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction – – – – – – – 9
2.1 Financial Institution – – – – – – 11
2.2 Theory of Economic Growth and Financial
Development- – – – – – – 11
2.3 Financial Regulation – – – – – – 12
2.4 Traditional Financial Institutions – – –
15
2.5 Advantages and Disadvantages of
traditional financial Institutions – – – – – – 16
2.6 Finance Market – – – – – – – 18
2.7 The structure of Nigerian financial
System – – 19
2.8 The money market and its institutions – –
24
2.9 Instruments used in the money market – –
27
2.10 The capital market – – – – – – 29
2.11 Types of capital market – – – – – 30
2.12 Major participant in the Nigerian
capital market – 32
2.13 How to access the Nigerian capital
market – – 33
2.14 Development financial institution (DFIs)
– 34
2.15 Other financial institutions and funds –
– – 36
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction – – – – – – – 40
3.2 Design of the Study – – – – – – 41
3.3 Area of the Study – – – – – – 42
3.4 Population of the Study – – – – – 42
3.5 Sample and sampling techniques – – – 42
3.6 Instrument for Data Collection – – – – 43
3.7 Development or Validation of the
Instrument – 44
3.8 Administration of the instrument – – – 45
3.9 Method of Data Analysis – – – – – 45
CHAPTER FOUR:
DATA PRESENTATION, ANALYSIS AND
INTERPRETATION
4.0 Introduction – – – – – – – 47
4.1 Data Presentation – – – – – – 47
4.2 Analysis of the Data – – – – – – 50
4.3 Interpretation of Data – – – – – 56
CHAPTER FIVE:
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.0 Introduction – – – – – – – 59
5.1 Summary of Findings – – – – – 59
5.2 Conclusion – – – – – – 61
5.3 Recommendations – – – – – – 62
REFERENCES
APPENDIX 1
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Economic growth for developing countries has
important indications for poverty elimination and world economic development.
This has been the goals of world financial institutions such as World Bank and
International Monetary Fund (IMF) to study economic development of Abia State
and how to quicken the country’s development.
The financial institution plays this
importance in the development of the economy through granting of loans and
advances thereby providing short-term and medium term capital for investors.
The loans and advance may be in the form of direct loans, overdraft or by the
discounting of bills with amount borrowed; investors could finance various
projects in the area of industry, agriculture and commerce. This therefore
helps to speed up economic development (Ebuka 2001). The apex bank helps to
develop the financial markets by training indigenous personnel in the art of
monetary management and by encouraging the growth of financial institution
which operate in these markets. The development of the financial system helps
to provide investment outlets in securities such as treasury bills, shares,
stock etc. through money and capital markets that provide capital (Pandy,
2004).
So, the developmental roles of financial
institutions on economic development of Abia but across the following sectors
to includes, traditional financial institution, financial market, financial
regulations, theory of economic growth and financial development and other
financial institutions. Financial institution include, commercial banks (Joint
stock banks), discount houses acceptance houses (Merchant banks), finance
houses, the central banks, saving banks, development bank, insurance companies,
hire purchase companies, the national provident fund, the stock exchange,
building societies etc.
The banking decree (1961) in Nigeria
specialized types of financial institutions which carryout banking business. A
common feature of such banking financial institutions is that they accept
deposits, but the use of which they put such deposits differs in detail. The
four institutions specifically mentioned were commercial bank, discount house,
acceptance houses and finance houses.
1.2
STATEMENT OF THE PROBLEM
In recent times, customers and business men
who rely on financial institution for supply of funds are having difficulty
because of high interest rates. The process if setting such facility is
sometimes rigorous thus incapacitating a fast growth rate in business and
economic development. The requirement of collateral security before a facility
can be given to a customer is a problem because before one decides to go for a
financial help it is obvious he doesn’t have anything or probably he is trying
to rise up. In most cases some customers are not properly advised on what
business to venture into.
1.3
OBJECTIVES OF THE STUDY
The main objectives of the research are:
To offer a detailed and realistic study of
the ministry of economic over the recent decades.
To review partially the literature concerning
growth theory, economic growth and financial institution.
To investigate the contribution of financial
institutions to the economic growth using deposit/GDP ratio etc in a developing
state setting in ministry of economic.
To study the development of the commercial
banks in the ministry of economic in recent decades; and
To find out measures of curbing factors
militating against financial institutions.
1.4 RESEARCH
HYPOTHESIS
H0: Financial institutions do not help the
local entrepreneurs to set up their business.
H1: Financial institutions help local
entrepreneurs to set up the business.
H0: Financial institutions do not play a major
role in economic development.
H1: Financial institutions play a major role
in economic development.
1.5
SIGNIFICANCE OF THE STUDY
Obviously, the essence of academic research
project is to promote intellectual advancement and academic excellences. This
research will be of immense benefit to all interested readers, such as the
student’s managers, business investors, debtors and creditors. The government,
individuals, foreign investors, share holders, prospectus investors. It will
also be of added advantage that in adding value to existing related literature
and future researchers.
1.6 SCOPE OF
THE STUDY
This research project is based on the
developmental roles of financial institution on economic development of Abia
with a particular reference to ministry of economic development, Umuahia Abia
State.
1.7
LIMITATION OF THE STUDY
It will be a non-challenge to state here
clearly that the major constraints to this research study are the financial
constraints, limited time due to academic calendar. It is with notice that due
to the above constraints the research could not cover the area of interest and
call for optimum support in the future research.
1.8
DEFINITION OF TERMS
Financial Institution: Financial institution
is an institution that provides financial services for its clients or members.
Development: Development is the act of
bringing to a more advanced state, growth and progress.
Economic: Economic is a system of a country
or other area, the labour, capital and land resources and the manufacturing,
production trade, distribution and consumption of goods and services of that
area.
Decision Rule: If the calculated value is
greater than the critical value reject the null hypothesis, but if the critical
value is greater than the calculated value accept the null hypothesis
CHAPTER TWO
LITERATURE
REVIEW
2.0
INTRODUCTION
Financial institutions are organization which
deals primarily in money. They constitute the financial framework of an
economy. Financial institutions help to pool saving and excess liquidity from
millions of individual and firm within the country and make them available to
those who require them for various purposes (Anyanwuocha, 2004). The financial
institution includes the traditional institutions, financial market, money
market and capital market, commercial banks, finance houses, central bank etc
(Anyade, 2003).
The banking decree (1969) in Nigeria
specified four types of financial institution which carryout banking business.
A common feature of such banking financial institution is that they accept
deposits, but the use to which they put such deposit differs in detail.
Therefore, the commercial banks is a financial institution which deals in money
and credit and which receives deposits from the public and organization some of
which are repayable on demand by cheque. So the central bank is usually a
government owned bank which help to control and supervise the entire monetary
and financial system of a country. Being a financial organ of the government,
it carries out the major financial operations of the government. It regulates,
directs, assists and coordinates the operations of other financial institutions
so as to make them comply with the monetary and economic policies of the
government (Pandy, 2004).
2.1
FINANCIAL INSTITUTION
A financial institution is an institution
that provides financial services for its clients or members. Probably, the most
important financial service provides by financial institution is acting as
financial intermediaries. Most financial institutions are regulated by the
government.
2.2 THEORY
OF ECONOMIC GROWTH AND FINANCIAL DEVELOPMENT
This section is divided into four subsections
which are:
The role of financial institution in economic
growth
Factors affecting economic growth and the and
the growth theory.