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The project’s goal is to enlighten the public about the “effect of bank failure in Nigeria.” It aims to bring to light some of the activities or services provided by the banking industry, as well as the reasons and consequences of bank failure. The project is divided into five chapters.

The relationship is addressed in this chapter, which includes background information on the growth of the financial system and bank failure.

The second chapter deals with a study of relevant literature in this topic, emphasising various literary opinions of bank failure causes and bank depositors. It also addresses the roles of banks in Nigeria’s economic development.

Furthermore, the third chapter deals with the approach and sources, which include background information, population and sample building of instruments, statistical methods used in data analysis, and so on.


Failure, as a noun, refers to being unsuccessful in one’s attempts to achieve one’s goals or desires. Another variation on inability, unwillingness, or weakness that prevents the achievement of any stated objectives or aspirations.

Both of these draw attention to the operational world.” unsuccessful inability refusal fault and weakness “thus, bank failure is the inability of a bank to meet its objections to its customers, owners, and the economy on occasion due to a fault or weakness in its operation that has rendered it illiquid and later insolvent.”

There is little doubt that fraud has exacerbated the already dire position in Nigeria’s banking system. Fraud and embezzlement are uncommon. Both are left untouched in the fraud crisis smorgasbord.

Furthermore, fraud may not be ubiquitous in and of itself. Banks that have left no stone unturned in the fraud epidemic may not be a sufficient condition for a banking crisis.

According to the study, particularly poor management until harsh economic conditions resulted in unexpected capital on flows or loan losses. Even if every bankrupt bank is determined to have suffered from mismanagement or fraud, or operated in an overcrowded banking market, it is possible that bad economic conditions will be the direct cause of numerous bank failures.

Employees and clients of companies in various industries commit fraud all around the world. While it cannot be claimed to be an ordinary expected human action, communist societies around the world declare it to be an inhuman behaviour. Although the prevalence of frauds in banks is not an uncommon or surprising event, Ogwuma, P.

(1985:21) believes it is concerning since, of all the challenges affecting the Nigerian banking industry today, fraud is easily the most difficult to resolve. The banking industry is more concerned about fraud because of the clear negative implications of the crimes on the health and survival of the organisations.

The frequent occurrence of fraud eventually diverts management’s attention and raises operating expenditures. Time and resources that would have been spent on improving customer service will now be spent on avoiding fraud. Moonies that would have been spent on service improvement initiatives would instead be used to create up fraud control procedures systems.

The banking business, like other industries, is concerned about fraud since it varies greatly in nature, character, and methods. Furthermore, the control of one species appears to give rise to another, which is generally more advanced and intricate.

As a result, each example can be considered as a variety of another and, without a doubt, on instrument research in human negative use of cleverness and endowment.

According to Crosse on Hampel (1973:2420), there are five basic types of bank fraud.

They are as follows:

a. Borrowing a few naira and repaying it over time, the sums involved increase and the willingness and ability to “repay” decreases.

b. Forgery of a customer’s signature in order to withdraw funds from his or her account.

c. Providing loans to fictional borrowers and

d. Making loans without obtaining enough security and information from consumers.


Bank fraud is induced by two sources: internal and external, which are theoretically distinct. According to Adewuni (1986:2), “these sources are very often not separable in practise,” which means that an unintended (ie owing to negligence or error of judgement of an insider a bank employee0. Indeed, Soneye, O. O. (1985:3) stated that “the public believes, and rightly so, that most fraud in banks occurs with the active collusion of bank staff.”

How does a boy explain, for example, how a cheque drawn in the name of the federal government of Nigeria is paid into some private ones describe how a completed other institution or individual collects a draught created in the name of an institution or individual?

This is not an exception to the rules; rather, it is a common occurrence.” The causes of bank fraud can be divided into institutional reasons and lapses.

A. Institutional Factors/Lapses: These are reasons that can be traced back to the internal environment of the organisation and are, to a large degree, under the control of the bank’s management. “Poor management” is one of the key institutional causes of fraud. Adewuni (1986:3) noted the following manifestations of this.

– An insufficient level of oversight;

– Inadequate control through competent policies, procedures, and systems.

– Inadequate experience, resulting in willful deceit;

– Branch understaffing, resulting in standards being compromised.

– Overstaffing due to people working on a specific timetable.

– Inadequate pay and working conditions

– Disappointment and

– The nation’s extended family units are highly interdependent.” To support this, Ogwuma P. (1985:6) states, “but the pity is that many ordinarily honest employees have turned fraudsters because of the demand and expectations of their connections and society in general, while others have fallen victions of inter desire to “live up to the jobless.”

B. Societal and environmental factors/lapses are environmental factors in which banks operate. The bank is a social institution, not a piece of land. The following have been highlighted as societal elements that contribute to bank fraud.

– Misallocation of societal values as what.

– Money is highly valued and worshipped in society.

– Society’s condemnation of bank employees and their desire to live up to such a negative image?

– Law enforcement agents’ inability to detect fraud.

– Inadequate punishment for fraud perpetrators to function as a deterrent and

– Outsiders encouraging bank employees.

Individuals and organised crime syndicates. There is also significant concern about computer fraud, owing to the difficulties in detecting it before large-scale losses occur.


Every country tries to figure out how to keep a healthy financial system due of its importance in economic growth and the development of bank failure in society.

Since the commencement of banking in Nigeria, there has been a significant crisis of bank failure. This is without a doubt a set bank in our pursuit of economic growth and progress. A scenario like this should not be allowed to continue. This reasons of bank failure is the natural next step in developing a practical policy to halt the trend.


The goal of this study is to draw attention to the impact of bank failure in Nigeria, which is threatening to stymie the country’s economic growth and progress. To that end, the primary goal of this research is to:

i. Determine the causes of bank collapse in Nigeria.

ii. Create a model for identifying bankrupt banks.

iii. Make policy recommendations to reduce the occurrence of bank collapse in the country.


1. Can the Nigerian Central Bank and the Deposit Insurance Corporation assist in reviewing some collapsed banks?

2. Has the liquidity of bank depositors been harmed by bank failure?

3. Does bank failure cause depositors to lose faith in the banks?

4. As a result of bank failure, there is widespread retrenchment and unemployment.

5. How can bank failure affect the economy’s magnetization?


H0: Bank failure has little effect on Nigeria’s economic development.

H1: The impact of bank failure on Nigeria’s economic progress.

H0: The government plays a role in the downfall of some banks.

H2: The government does not play a role in the downfall of some banks.

H0: There is no answer to the Nigerian economy’s bank failure.

H3: There is a remedy to the Nigerian economy’s bank failure.

H0: There has been widespread retrenchment as a result of bank failure.

H4: There is no widespread layoff as a result of bank bankruptcy.


The significance of this study is to achieve great success in contributing the little that the researcher can, if not a great deal, to solving the bank failure problem in Nigeria, which will result in a massive change in the Nigeria banking sector with specific reference to Standard Trust Bank Enugu.

It is hoped that this research can enlighten the workers and management of banks, particularly Standard Trust Bank Enugu. Furthermore, it will result in more profitably contribution and progress for every other bank countrywide to understand their difficulties and regions;

additionally, this study will function as a means to effectively address most of the fundamental problems. Again, it will benefit society as a whole in the event that the failures syndrome in Nigerian banks is removed completely.

Finally, because the researcher limited the study to Enugu State and Standard Trust Bank, the findings will be of enormous benefit to all banks in Nigeria as well as students performing comparable research on the same or related issue.

The following chapter examines data analysis and interpretation, as well as the responses of respondents to the various research questions.

Finally, chapter five presents a summary of the whole study’s recommendations and areas for further investigation.

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