ROLE OF NIGERIAN COMMERCIAL BANKS IN NATIONAL ECONOMIC RECOVERY
ROLE OF NIGERIAN COMMERCIAL BANKS IN NATIONAL ECONOMIC RECOVERY
ABSTRACT OF NIGERIAN COMMERCIAL BANKS' ROLE IN NATIONAL ECONOMIC RECOVERY
As a country advances through earlier stages of economic growth and development, expectations about the role of banks in economic growth development and social mobilisation grow larger and more weighty.
This predicament is exacerbated when a country experiences the trauma of economic recession, as Nigeria is currently suffering.
The economic downturn has forced a review of commercial banks' roles in revitalising the economy through more effective operations and greater attention to the bank-customer relationship.
Most learned educators have clearly offered a manage of government and public expectations on the role of banks in national economic recovery efforts; they identify the challenge of Nigerian commercial banks as.
Absence of desire to follow the government's monetary and credit policies.
Risk aversion demonstrated by the normal insistence on the provision of unreachable goals and; rigidity in banking processes.
The study follows the impact of budget and development plans on the structure of the economy from independence to today, using GDP as the primary economic indicator.
The directors and stakeholders of banks are responsible for ensuring the safety, liquidity, and operational efficiency of the institutions.
The article also emphasises the negative impact of the recession on the banking system, including the surplus liquidity, scarcity of borrowers, and fall in loan and advance arming.
Banks are urged to be more creative than ever before by enhancing operating efficiency, lowering costs, and aiding the government with structural adjustment and resource reallocation.
Finally, the causes of the current economic downturn can be traced back to an over-reliance on a single commodities external sector. The answer to resolving most domestic economic difficulties resides in the generation of long-term remedies to external-sector concerns.
At a time when economic self-reliance is being emphasised, critical sectors such as exports and small – size firms that could act as spring hoards for this are being denied credit.
However, the current status of commercial banks has disturbed the government and people of Nigeria because of their importance in national economic recovery.
The idea is based on voluminous data quoted from authentic factual materials on the subject and is the result of extensive investigation. The study also provided a well-researched performance evaluation or analysis of the banks in Nigeria today in order to guide prospective investors and clients.
INTRODUCTION TO CHAPTER ONE OF THE ROLE OF NIGERIAN COMMERCIAL BANKS IN NATIONAL ECONOMIC RECOVERY
1.1 STATEMENT OF THE PROBLEM
Our current economic conditions necessitate intentional and committed efforts on the part of our banks' boards and chief executives to promote a rapid economic recovery. The banking industry is critical to any country's economic operations (Ijewere 2000).
In the current epoch, no economy can function without banks and other financial organisations. The banking business is well-known for offering a wide range of interconnected services to individuals, governments, for-profit and non-profit organisations.
Since independence, West African countries (particularly Nigeria) have become aware of the important roles played by commercial banks in the raucously of the country (Isewere 2000).
Steps were then taken to regulate the behaviour of foreign owned banks, first by requiring their local branches to be incorporated participation through indigenization (Ijewere 2000).
In recent years, Nigeria has seen an unpredictable economic and social climate, which has prevented banks from properly carrying out their responsibilities, affecting all sectors and the economy in general.
In order to achieve national economic recovery, Nigeria must restore employment stability and address the inflationary crisis that has plagued the country.
This project effort is likely to recognise the critical roles that banks are expected to play in enabling Nigeria's economic recovery. In line with this, it is necessary to investigate the extent to which Nigeria's new government system and structure will favourably support and sustain banking industry profitability. A thriving economy
The investigation's goal is to:
1) Determine whether our economy's slow economic recovery is due to inefficiencies in our commercial banks' clearing systems.
2) To investigate whether bank surplus liquidity has anything to do with the slow economic recovery.
1.2 THE RATIONALE FOR THE STUDY
This project is likely to recognise the critical responsibilities that banks are expected to play in enabling Nigeria's economic recovery.
In line with this, it is necessary to investigate the extent to which Nigeria's new government system and structure will favourably stimulate banking industry profitability in order to preserve a viable economy.
This study is vital because it will investigate the influence of banks' roles in national economic recovery. It will also investigate the roles of commercial banks in economic stabilisation.
It will also demonstrate the impact of banks' participation in acquiring greater employment, higher investment, and economic diversification in order to achieve economic recovery.
1.3 THE SIGNIFICANCE OF THE STUDY.
Commercial banks in Nigeria play a critical part in the country's economic revival. The banking system is the engine of growth and development for any economy, as stated by Bello (1993), who stated that banks are the heart of any economic system.
This project activity will be advantageous to.
1) Bankers: Bankers would benefit greatly from this effort since it will enable them better comprehend the impact of their activities on national economic recovery.
2) Economists: This paper will be useful to economists since it will show how important the banks' role is in the economy.
3) Government: The government requires it to determine how effective commercial banks' roles are in the nation's economic recovery.
4) Students: During the course of their studies, students will make reference to economic stability.
5) Future Researchers: They will refer to it as one of the literature Reviews in the course of their research.
1.4 INTRODUCTION TO THE STUDY
Equity Bank of Nigeria Limited was established in Nigeria as a limited liability company.
It was formed as a private limited company in December 1988 and began operations in January 1986 as Meridian Equity Bank of Nigeria Limited.
It changed its name to Equity Bank of Nigeria Limited on May 25, 1995, after the relationship with Meridian International Bank Limited (in liquidation) was served.
The bank was founded with 60% owned by respected Nigerians and 40% owned by a foreign bank. However, thrilling respected Nigerians and 2.95% own Nigerian Intercontinental Bank now own 67.4% of the bank's paid-up capital, while Equity Bank staffs own 29.65%. The new paid-up capital base of N515.3m was reached through the injection of N22.14m in new funds.
Mr. Chris A. Alabi, Chairman of the bank, is Sam O. Obaze, Managing Director and Chief Executive Officer.
Other notable and experienced management teams include Adeoye G. Adewale, Iyiola S. Adegboye, Cahrles G. Ogunbona, Olayato Aribo, and others.
In the previous fiscal year, the bank had exceptional growth that exceeded expectations. In the last five years, the bank's assets have grown gradually by 36% on average, from N 2.83 billion to N 3.7 billion. Profit before tax climbed by 183% from N108.6m to N307.5m.
Profit after tax was N288.3m compared to 104m, signifying a 174% gain as of December 31st, 1998. The bank has a track record of overseeing high-quality projects with money from international institutions such as the Asian Development Bank and the World Bank. The bank has also managed water projects in over 30 states, including eight in Niger.
According to the Delta Development Commission (NDDC).
In response to changes in the baking environment and evolving consumer needs, the bank has made significant investments in information technology.
Customers, the bank has made significant investments in information technology. The bank has upgraded to more sophisticated software in order to improve its operating standards and become more relevant as an agent of economic development.
1.5 DEFINITION OF TERMS
1. Banking sector: In this context, the banking sector refers to commercial banks.
2. Agent: One who acts on behalf of another, the other being his principal.
3. Allocation of resources: Any government activity that impacts the amount and quality of commodities and services provided ecy providing public education.
4. Open market operation (Omo): the buying and selling of government securities such as development bonds and treasury bills.
5. Development plan: This is the country's set of strategies for achieving quick economic growth and development.
6. Insolvency: the circumstance in which a bank's or firm's liabilities outweigh its assets.
7. Regulatory and supervisory authorities These authorities include the Central Bank of Nigeria (CBN) and the National Deposit Insurance Corporation (NDIC).
8. Distressed bank: A bank that has a precarious financial condition. Overtime: A bank with management, operational, and financial shortcomings.
9. Treasure Bills; these are short-term debt securities with a maturity of 19 days issued weekly by the Central Bank of Nigeria to raise funds for the federal government.
10. Cheque Clearing: This is a situation in which banks gather on specific days for the purpose of exchanging debt instruments (cherques).
11. Liquidity: The circumstance in which a firm has enough cash to pay its obligations in the short term.
NDDC stands for Niger Delta Development Commission.