THE ROLE OF COMMERCIAL BANKS IN THE FACE OF A DEPRESSED ECONOMY

(A CASE STUDY OF FIRST BANK NIGERIA PLC)

CHAPTER ONE

INTRODUCTION

1.0       BACKGROUND OF THE STUDY

Having chosen this topic to write on, my objectives is to find out the roles played by our commercial banks in our present economic situation whether they being followed in this time of economic recession their effects on the economy and the extents to which they have gone in helping to revamp  the economy. commercial banks.

            The historical background or theses commercial bank are made up of banking and non-banking institutions.

            The historical background of these commercial bank is mode of operation which is an important aspect of this study. By their historical background. We can now know the aims purpose, objectives of these commercial bank in our economy. In 1st   July 1959, the first central bank of Nigeria (C.B.N) which was the apere bank that control other commercial bank in the country was established. Commercial bank is the oldest of all banking institutional in Nigeria, it dates back to 1892 when. It was known as the bank of British West Africa (Now First bank of Nigeria) was established. This was followed in 1917 by the Barchys bank  (Dominidu, colonia and overseas) (DCO) (Now union bank in 1933. the first successful Indigenous commercial bank was named National bank of Nigeria was established in 1948. African continental bank (ACB) was established by 1960 at independent, these were (12) twelve banks operating in the country with a total number of 160 offices and branches scattered in different locations of the country.

Many specialized credit instutitons have in the past two and half decades developed. These includes the Nigeria Merchant banks, Nigeria industrial development bank (NIDB) Nigeria bank for commerce and industry (NACB) established 1973 and restructured in the 1978 to include the finance of co-operative bank established in the federal mortgage bank of Nigeria constitution in July, 1977, merchant banks then are relatively new business which were trance to 1960 when First bank Nigeria PLC was established. The Non-bank commercial bank includes finance companies, the oldest finance Ltd was established in 1959.

Then insurance companies, then first insurance companies were 1921 and was named Royal exchange Assurance company, investment companies unit trust, co-operative societies which have its foundation from the establishment of co-operative stores in 1844 in Britain, its origin in Nigeria banks to the eighteen (18th) century Bureax De change which was establish in 1989 though the decree that the same your and persen provident fund.

            It is the desire of all these commercial banks to to create an impact on the Nigeria economy. Also the citizen’s expectant from all these commercial bank  is to see the roles played by these commercial bank in our present economic situations.

1.2              STATEMENT OF THE PROBLEM

In view of the depressed economy, there are bedeviled practices which disturbs commercial banks in carrying out their roles for the growth of the economy. Those practices are as fellows below:

(1)               Lack of ability to supply funds (Loan) to the small scales industries (Business)

(2)               The inability to offer interest yielding financial instruments.

(3)               The inability to effectively manger the financial aspect of the economy.

1.3              OBJECTIVES OF THE STUDY

The objectives of the study is to find out whether the role is improving the growth and development of Nigeria economy is being played efficiently and effectively and those things that gives distress in the system. Another objective was to know or X-ray what the government is doing to maintain any commercial bank in a depressed economy like Nigeria and solve the problem if any and also solved the problem of low productivity. And unemployment in the economy at large. And also in partial fulfillment of my national diploma (ND)

1.4              SIGNIFICANCE OF THE STUDY:

The research project is more important to the commercial banks and department of the central bank of Nigeria,  various commercial banks in Nigeria and it will also serve as readable material for further research.

It is necessary for lectures (Teachers) and workers in relation to this study. It is important to student taking courses in accountant, banking and finance and economics to have modern approach to the teaching and understanding the commercial banks in which they will find interest in.

1.5              SCOPE OF THE STUDY

The research project is designed to cover the roles of commercial banks in the development of the economy. It shall cover both the present and past period of commercial banks in Nigeria. For easier collection of data some banks particularly commercial banks will be examined for the research.

1.6              RESEARCH QUESTION

(i)                 Does commercial bank (Banks) engage themselves in activities that help to develop the economy?

(ii)               Does the banks regulation have any effect on the roles of commercial bank as they play in the economy?

(iii)             Does long-term borrowing affect the role of commercial bank in a depressed economy?

(iv)             Is the contribution of financial funds to banks enough to be felt at well as stimulating the economy?

1.7              RESEARCH HYPOTHESIS

The oxford advanced learners dictionary defined hypothesis as suggestion or idea the is based on know facts and is used as basis for reasoning or further investigation. For the purpose of this study, the hypothesis shall be analyzed in order to prove their level of rejections and acceptance. These are hypothesis which were used.

Ho: There is no significant relationship between financial

institutions and economic development.

Hi: There is significant relationship between financial

Institution and economic development.

 Ho: There is no significant relationship between financial

institutions and implementation of government policies

Hi:  There is a significant relationship between financial

institutions and implementation of government policies

1.8              LIMITATIONS OF THE STUDY

I wish to express my difficulties which I encountered when collecting information through the questionnaires

The present fuel price increase was a major limited as it made transportation to these banks and libraries quite difficult.

Besides times and financial constraints, some other factors that militated against this research projects includes:

1.         Lack of books:         The scope of its work was electively affected because of scarcity of books in the relevant areas.

2.         Attitude constraints:           In the case of the questionnaire, some blatantly refused to collect it to gill while those that collected tool a lot of time to fill the required answers. Some fill them haphazardly.

3          Bureautic constraints:                     Under this limitation concrete attempt made to interview or reach top official failed because of redtaptism in running official engagements and procedures in releasing the official or secret of the company.

1.9              DEFINITION OF TERMS:

i.          commercial bank:    it may be defined as unit or sectors which mobilized sailing and allocate them into investment projects for this study, I shall take them as those institutions which gather together financial resources from surpluses sector to pump into the deficit sectors for economic development.

ii.       Modus operand: This means the mode of operation in the commercial bank.

iii.               Financial intermediation: these are commercial banks which match the deposit requirement of savers with the investment requirements of the borrowers.

iv.               Savings: it constitutes that part of income not spent on consumption or expenditure on goods or services. But for in purpose of this project, saving will be taken as that part of total income not spent on immediate consumption but is set towards accentuation of capital for further transactions.

v.                  Non-Banks: In this project, non banks on commercial banks includes insurance companies, investment companies unit trust, co-operative societies, Bureax De change, primary mortgage institutions and pension and provident fund all these are non-banks, commercial banks which help in economic growth of a depressed economy.

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