Project Materials







1.1 Context of the Study

Businesses, like individuals, are not created evenly. Some organizations in Nigeria would be profoundly missed if they disappeared, but life would continue. There are some businesses that, if they were to fail, would trigger the collapse of significant portions of economies and society. The deposit money belongs to this second group. Deposit money banks are the most essential entities for mobilizing savings and allocating financial resources. Consequently, their roles make them an essential sector and a foundation of economic development and prosperity.

Deposit money banks, often known as commercial banks, are financial institutions that accept deposits, provide business loans and vehicle loans, mortgage lending, and basic investment products such as savings accounts and certificates of activities deposit. According to the prevailing notion, they function as financial intermediaries to channel savers' funds to businesses and individuals seeking finance for their activities. Both monetary and development economists acknowledge their significance as a stimulus for economic growth/development. The financial system of Nigeria is controlled by the industry, particularly the deposit money bank, which serves as the basis for the system's development. The credit component of the Nigerian economy is an important link between the monetary and real sectors. In completing these responsibilities, deposit money banks must recognize that they have the potentials, scopes, and possibilities of mobilizing financial resources and allocating them to productive investments, which, in turn, promotes sustainable performance and keeps enterprises alive. Not only do they hold our savings and lend us money when we need it, but they also serve as the arteries that transmit money throughout the economy, which is why they are often referred to as financial intermediaries. Consequently, their primary function is the mass transfer of funds from those who wish to lend to those who wish to borrow. A fully functioning economy, whether rich or poor, requires well-developed and healthy deposit money banks. Why? Oluyemi (1995) views deposit money banks as an engine of growth of a country's economy that could significantly contribute to the promotion of rapid economic growth. This is because companies like medium and small scale enterprises and individuals need to borrow money to start a business and then to build decent, formidable, and innovative businesses, which constitute the launching pad for any meaningful growth in any developing economy. It has also been considered as a stimulus for economic growth when the financial institution is well-developed and deemed healthy (Adeoye, 2007). A 1997 research by the World Bank highlights the role of the banking sector in the process of financial integration in emerging nations.

Thus, deposit money banks are inextricably related to the economic development of any nation. In terms of a person's entire functions, they are figuratively comparable to the body and soul. The proper operation of these banks contributes to the economic progress of a nation. They contribute significantly to the economic growth of a nation. They are patterns of resources designed to fulfill the demands of small and medium-sized businesses.

1.2 Description of the Problem

Despite the fact that small and medium-sized enterprises (SMEs) have been viewed as the backbone of job creation and technical advancement in Nigeria, the sector has been subject to a fair amount of neglect, which has had unfavorable effects on the economy. In a seminar titled “Career Crisis and Financial Distress- The Way Out,” the General Manager of Enterprise and Financial Support Company Limited, Mr. Oluseyi Oluboba, revealed in his research that, despite the fact that SMEs in Nigeria face numerous problems, restricted access to money and capital markets is the greatest obstacle they face.

The incapacity of most deposit money banks in Nigeria to meet their financial obligations to their stakeholders is a second obstacle. This typically results in bank runs, as banks and their clients engage in significant credit recalls and withdrawals, necessitating Central Bank liquidity support for the impacted institutions. Consolidation (mergers and acquisitions), recapitalization, usage of bridge banks, establishment of asset management corporations to assume control and recovery of bank assets, and outright liquidation of non-redeemable banks are examples of terminal intervention procedures. Consolidation of banks, which is central to the majority of banking system reform initiatives, can occur in the absence of a banking crisis. There are several reports of Nigerian banks taking advantage of their consumers through a variety of fees and practices. Customers frequently lodge complaints and demand regulatory intervention. Unfortunately, it appears that their complaints fall on deaf ears, as they are unaware of any beneficial regulatory response.

In response to the aforementioned issues, this study will analyze the impact of Deposit money banks (DMBs) on the growth of small businesses in Nigeria, as well as the concerns related with the recapitalization of DMBs and SMBs in Nigeria.

1.3 Objective of the Research

This study's primary objective is to determine the impact of DMB recapitalization on the expansion of small businesses in Nigeria. Specifically, the study aims to:

Determine the connection between deposit money recapitalization and growth in Nigeria.

2. Examine the difficulties involved with the DMB in Nigeria

3. Determine the issues inhibiting SME growth in Nigeria

1.4 Investigative Questions

Is there a connection between deposit money recapitalization and SME growth in Nigeria?

What difficulties are linked with the DMB in Nigeria?

What are the obstacles hindering the growth of small and medium-sized enterprises in Nigeria?

1.5 Scientific Hypothesis

There is no correlation between deposit money recapitalization and SME growth in Nigeria.

There is a correlation between deposit money recapitalization and SME growth in Nigeria.

1.6 of the Research

This study, when finished, will be of great use to a variety of stakeholders in their efforts, including governments at all levels, SME promoters, etc.

It supports policymakers in the creation of laws and regulations that foster an enabling environment for small and medium-sized businesses.

This study will enable them to identify the challenges facing the growth of small and medium-sized businesses.




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