IMPACT OF BRIDGE BANKING ON DISTRESS RESOLUTION IN THE NIGERIAN BANKING SECTOR
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IMPACT OF BRIDGE BANKING ON DISTRESS RESOLUTION IN THE NIGERIAN BANKING SECTOR
INTRODUCTION
The study looks into how bridge banking affects how financial distress is resolved in the Nigerian banking sector. The investigation’s goal is to determine whether the development of bridge banks will benefit Nigeria’s banking sector and whether bridge banking has aided in the alleviation of financial crisis.
The central bank employee of Nigeria as well as employees of the two bridge banks in Nigeria were given particular questionnaires as part of the survey study design.
The percentage method and frequency distribution table were used to present the data, and the chi-square test was utilised to evaluate the hypothesis.
Empirical data and responses revealed that bridge banking aids in the growth of the Nigerian banking sector as well as the alleviation of financial distress. Following that, it was suggested that increased oversight of deposit banks’ operations in Nigeria be implemented to prevent any further difficulties.
1.2 Statement of the problem
The researcher’s desire to conduct this study was motivated by a number of factors that collectively constitute a weakness in the Nigerian banking sector.
Of particular significance are the recurrent instances of bank distress that foreshadow the adoption of bridge banking solutions. As a result, the problem statement is as follows:
i. Growing instances of bank distress in the nation: According to Saduiki (20-12), Nigeria has the greatest incidence of bank distress in sub-Saharan Africa. There have been five (5) distinct periods of economic crisis, each marked by significant employment losses and subsequent economic degradation.
As a result, the likelihood of finding a distress resolution that would endure over time is increased. In order to identify our impact in the resolution of bank distress in Nigeria, the research will examine the bridge banking system in Nigeria’s banking industry.
Banking industry distress has been observed, with each involving massive job losses and erosion of deposition fund general economic stock as a result of such distress. As a result, the likelihood of finding a distress resolution that would endure over time is increased.
ii. The low degree of confidence in the Nigerian banking sector: According to Adems (2012), shareholders and bank customers have very little faith in the management of Nigerian banking. Customers and investors (shareholders), it follows, do not wish to commit a sizable amount of their funds to banks.
Therefore, it is crucial that a suitable mechanism of distress resolution be put in place to assure increased customer and investor patronage if the banking industry is to advance.
iii. The Nigerian banking sector is underdeveloped. Cases of improper handling of bank funds, non-performing loans, bad debt, etc. have slowed the industry’s degree of development. According to Ajibade (2012), the industry’s actual growth rate is less than the fifth highest.
This contrasts with the abrupt growth in bank capital from 2 billion to 25 billion, which served as a means of ensuring the industry’s stable development (even in the event that bank distress should be promoted).
1.3.1 OBJECTIVES OF THE STUDY
There are two primary areas of attention for the researcher. The primary goal is to evaluate the Nigerian banking sector. Here, bridge banking focuses on temporary banks established by the government to take over and manage the asset ownership and liabilities of a defunct created researchable purposes, such as:
(i) To assess the contribution of Nigeria’s bridge banking system to the settlement of bank distress.
(ii) To determine how much the bridge banking system will contribute to regaining depositors’ and investors’ confidence in the Nigerian banking sector.
(iii) To determine if the introduction of a bridge banking system would aid in the growth of Nigeria’s banking sector.
1.4 Research questions
According to Asika (2002), a research question is a question that the researcher hopes their study will be able to answer, particularly one of the following kinds.
(i) Can Nigeria’s bridge banking system guarantee the settlement of bank distress?
(ii) Would a bridge banking system help Nigerian investors or depositors regain confidence in the country’s banking sector?
Would the Nigerian banking sector benefit from the development of the bridge banking system?
The researcher will be guided by the aforementioned query when selecting both the data set and the tool for data collection and analysis.
1.5 HYPOTHESIS STATEMENT
H0: In Nigeria, the bridge banking system is unable to guarantee the resolution of bank distress.
H1: Nigeria’s bank crisis can be resolved with the help of the bridge banking system.
H0: The bridge banking system cannot restore investors’ and depositors’ confidence in the Nigerian banking sector.
H1: By using a bridging banking system, depositors’ and investors’ confidence in the Nigerian banking sector can be restored.
H0: The Nigerian banking sector would not grow as a result of the bridge banking system.
H1: The Nigerian banking sector would benefit from the development of the bridge banking system.
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