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BANK FAILURE IN NIGERIA: PROBLEMS AND DIFFICULTIES



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BANK FAILURE IN NIGERIA: PROBLEMS AND DIFFICULTIES

CHAPTER ONE
INTRODUCTION
The term bank means a place where money and valuable are kept for safety. So bank
failure means the inability of the bank to meet its statutory obligation.
The financial sector of any economy plays an important role in promoting and supporting
economic growth and development. When the financial sectors in distress it cannot perform this
role effectively.
Modern commercial banking business commenced in Nigeria at about 1992. At that time,
it was solely a business for the foreigners.
Even at independence in 1960, about 80% of Nigeria banking business remained in the
hand of foreigners.
The skews in the ownership structure in fall our of foreigners was probably responsible
for the observed lack of access to bank credits by indigenous during the period.
To redress this situation and meet the financial requirements of Nigeria business, some
indigenous banks commenced operation in the late 1920 and 1930 at that time the banking
business was virtually unregulated those new indigenous commercial and merchant bank were
later to be faced with problem of under capitalization in experienced management hostile and
unfair competition from foreign bank.
The British Colonial authorities suddenly saw the need to regulate banking business in
Nigeria and therefore commissioned Mr. G.D. Pation in 1948 to study and determine the need for
banking regulation in Nigeria, following patlon’s recommendations, the bank ordinance of 1958
was enacted the implementation of which led to the failure of about 16 indigenous banks.
By 1954, 21 of the 25 indigenous banks operating in the country collapsed of the
remaining four only two are still operating in Nigeria today.
This become a source of worry to the public, manageress and regulatory bodies like
Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC).
This study however, intends to sue Cobi bank as a case study, it is hoped that the end of
the study, the causes and lost of bank failure and suggestion offered to deal with the problem.
1.1 BACKGROUND OF THE STUDY
The term bank means a place where money and valuable are kept for safety. Therefore,
following this bank important role in an economic is failure constituting a problem to me hence
the resolution to embark on this research study.
This study however, intends to use bank as a case study. It is hoped that at the end of the
study the cause and cause and cases of bank failure in the modern economy will be know better
and suggestion offered to deal with the problem.
1.2 STATEMENT OF THE PROBLEM
This research work intends to assess the major causes of bank failure in Nigeria and also
proper possible solutions to those problems.
1.3 PURPOSE OF THE STUDY
The purpose of this research work is to meet the requirement as a pre-requisite for the
award of national diploma (ND) in banking and finance.
1.4 OBJECTIVE OF THE STUDY
I. To identify the major causes of bank failure in Nigeria.
II. To describe implications of the bank failure to the economy.
III. To suggest possible ways of tracking the problem.
1.5 SIGNIFICANCE OF THE STUDY
The researcher assumes that identifying these bank failure products and as certain public
awareness will go a long way in improving banking/bank failure in Nigeria secondly.
Respondents – the right people with require information, truthful, honesting.
Data current and reliable, method of investigation data collection, data analysis.
1.6 LIMITATION OF THE STUDY
This research work has been easy as a result of time factor. This is because time
management constitute a manor constraint that under the debt coverage of the scope, also the
researcher encounters financial problem in the course of collecting data for the research. Read more


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