AN ASSESSMENT OF THE CONTRIBUTION OF COMMERCIAL BANKS TO THE ECONOMIC DEVELOPMENT OF NIGERIA (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
ABSTRACT
This research is being conducted on the Assessment of Commercial Banks’ Contribution to Nigeria’s Economic Development. The concept is also a wake-up call to society and business. The research was conducted using questionnaires and oral interviews with selected bank officials/staff on which the following questions must be tested are based on the contribution of commercial banks to economic development.
Some relevant hypotheses were developed in this study, and their validity was demonstrated by the findings and analysis of relevant data obtained. It is hoped that this study will provide readers, societies, and the business world as a whole with the necessary understanding of the concept in order to achieve a healthy atmosphere between society and organization.
TABLE OF MATERIALS
CHAPTER ONE
Introduction
1.1 The Study’s Background
1.2 Problem Identification
1.3 Hypotheses and Research Questions
1.4 The Study’s Objective
1.5 Importance of the Research
1.6 The Study’s Scope
1.7 Research Limitations
1.8 Case Study’s Historical Background
Reference
CHAPTER TWO
Review of Literature
Framework Conceptualization and Review of Related Literature
2.1 The Beginning
2.2 An Overview of the Nigerian Banking Industry
2.3 Definition of Commercial Bank
2.4 Commercial Bank Functions
2.5 Commercial Bank Objectives
2.6 Commercial Banking Issues
2.7 Suggestion for a Solution
2.8 Recent Developments in Nigerian Commercial Banks
2.9 Definition of the Term
Reference
CHAPTER THREE
Methodology of Research
3.1 The Beginning
3.2 Research Plan
3.3 The Study’s Population
3.4 Sampling and Sample Techniques
3.4.1 Data Collection Methodology
3.4.2 Original Source
3.4.3 Supplementary Source
3.5 Data Analysis Method
CHAPTER FOUR
Data Display and Analysis
4.0 Information Display
4.1 Data Examination
4.2 Hypothesis Testing
4.3 Significant Findings
CHAPTER FIVE
Conclusion, Recommendation, and Summary
5.1 Executive Summary
5.2 Final Thoughts
Recommendation 5.3
5.4 Further Research
Bibliography
Appendices
CHAPTER ONE
1.1 THE STUDY’S BACKGROUND
Nigeria as a nation is characterized by a developing economy because the various sectors responsible for economic development are not optimally utilized, as a result of which we have not been able to fully tap the natural resources that Nigeria is endowed with as it could increase our national earnings, resulting in an increase in per capita income. We are in a reverse situation, with low per capita income. A low standard of living raises the level of insecurity, for example.
Economic development is the first task on every government’s priority list. Nigeria, like other countries around the world, is not exempt. Banks, particularly commercial banks, play an important role in keeping the country’s development on track. It is critical to remember that the banking sector, of which commercial banks are at the forefront, is the bedrock of every economy. In fact, no country in the world today can claim to have developed or tested development without the adequate and timely contribution of commercial banks.
However, one of the major impediments to economic development in today’s countries is a lack of capital. In this regard, commercial banks act as intermediaries between those in need of capital and those willing to save and make the money available to investors.
They are expected to provide large credit facilities and divert voluntary savings into productive channels to some extent. Furthermore, they are to provide technical advice to industrialists through feasibility studies, ensuring that investments are made in the right direction.
Furthermore, there are numerous agencies/sectors involved in economic development, but the commercial banks are the sector that stimulates growth and development in the Nigerian economy. Perhaps the most important role of commercial banks is to pool savings and excess liquidity from millionaires or rather millions of individuals and firms within the country and make them available to those who need them for various purposes.
Economic development necessitates sustained improvements in social welfare that are pervasive throughout society, and modern economic growth that is confined to a small enclose within a developing society, especially if dominated by a non-indigenous people, is not economic development.
Economic development necessitates that modern economic growth affect a larger segment of the total population in a way that improves their well-being. It entails meeting basic needs, accelerating economic growth, reducing inequality and unemployment, eliminating absolute poverty, and changing attitudes.
The purpose of the above provisions, which prompted the establishment of commercial banks in Nigeria, is to meet the citizens’ aspirations. The purpose of this research is to identify the contributions that commercial banks have made to the development of the Nigerian economy.
1.2 PROBLEM STATEMENT
Countries all over the world strive to articulate well-intended policies that will save them from extinction. Nigeria is also in line with other countries seeking economic prestige. That is why, in order to save the economy, the country established a number of commercial banks.
Despite the establishment of commercial banks, Nigerians continue to complain about insufficient capital for investment and a high level of unemployment. The reduction in the Gross Domestic Product (GDP) was one of the concerns that the concept of establishing commercial banks was designed to address.
1.3 THEORIES/RESEARCH QUESTION
A hypothesis is a statement that demonstrates the relationship between two variables.
As a result, the following hypothesis are proposed for this study:
Ho: The establishment of commercial banks in Nigeria has aided the country’s economic development.
Hi: The establishment of commercial banks in Nigeria has not contributed to the country’s economic development.
Ho: Increased bank lending will reduce the country’s unemployment.
Hi: Increased bank lending will not reduce the country’s unemployment.
Ho: Increased bank lending will boost the country’s Gross Domestic Product (GDP)
Hi: An increase in bank lending will have no effect on the country’s GDP (GDP)
1.4 THE STUDY’S OBJECTIVE
The primary goal of this research is to conduct a critical examination of commercial banks’ contributions to Nigeria’s economic development. The study’s specific goals are as follows:
1. Assess the contribution of commercial banks to Nigeria’s economic growth.
2. Research the role of commercial banks in the development of Nigeria’s economy.
3. To make recommendations on how commercial bank activities could lead to investment.
4. To assess the extent to which commercial banks have been impacted by the economic downturn.
5. The study will also look critically at the causes of the economic meltdown and how to manage it.
1.5 THE STUDY’S IMPORTANCE
The research project aims to critically examine the contribution of commercial banks to Nigeria’s economic development, with a focus on First Bank of Nigeria Plc. Nonetheless, this study is significant because it attempts to analyze the evaluation of commercial banking in relation to economic development. Furthermore, this study will add to the existing literature and will serve as a reference for any future researcher or organization conducting research in a similar or related field.
As a result, it will be something to which the institution will refer in the future. It will be housed in the institution, allowing other students involved in research to benefit from the work.
To the bank, particularly First Bank of Nigeria Plc, it will serve as an evaluation of their performance, allowing them to make changes where they are lacking and providing encouragement where they are succeeding.
Prospective shareholders are also among the external users. These projects can be used to encourage both the government and the general public. It can encourage shareholders to invest, especially if the bank is performing well. This is because they are confident that they will not incur a loss at the end of the day or from their stock investment.
It will serve as a mirror for the government to see the impact of bank lending directives and how they affect the country’s economic development. In addition to government decisions and policies, it can use the bank to channel capital projects through the bank.
Due to the bank’s solid track record in terms of service delivery and the safekeeping of customer money and valuables, these studies are certain to increase the level of confidence among bank customers.
1.6 STUDY OBJECTIVES
The primary goal of this research is to evaluate commercial banks’ contributions to Nigeria’s economic development. The study, which is based on First Bank of Nigeria Plc, will focus primarily on commercial bank lending and how it affects Nigeria’s economic development.
1.7 THE STUDY’S LIMITATIONS
Aside from time and resource constraints, the researcher ran into some issues while gathering materials and analyzing data. The bank is hesitant to release all of the necessary data for the research work, most likely due to competition. This presented a minor issue for the researcher. Information critical to this study is classified as confidential and will not be released.
Another setback for the researcher was the uncooperative attitude of some respondents, which resulted in the non-return of some questionnaires. The time allotted to the researcher to complete the research work was limited, and when combined with daily lectures, the time allotted for this project is far too short, given the academic activities that must all be completed in a short period of time.
1.8 CASE STUDY HISTORICAL BACKGROUND
For over a century, First Bank of Nigeria Plc. has distinguished itself as a leading financial institution and a major contributor to economic development and the advancement of the Nigerian economy.
Sir Alfred Jones, a shipping merchant, founded the bank as a limited liability company on March 31, 1894, with its headquarters in Liverpool. It began operations in Elder Demporate’s office. A company in Lagos known as the Bank for British West Africa (B.B.W.A) with a paid capital of 12,000 pounds was established earlier in 1892.
In its early years of operation, the bank grew rapidly and collaborated closely with the colonial masters in their governance, performing traditional functions of a central bank such as specie issue in West Africa coverage, a branch was opened in Accra, Ghana in 1896 and another in fret won, Sieraleone in 1898. This was the beginning of the international banks in Nigeria. Was in old Calabar in 1900, and services were extended to Northern Nigeria two years later.
The bank had previously undertaken restructuring initiatives. Its name is changed from Bank of British West Africa to Bank of West Africa in 1957. In accordance with the Company Decree of 1968, the bank was incorporated locally in 1969 as the Standard Bank of Nigeria Limited. Changes in the Bank’s name resulted in a decentralized structure with five regional administrations.
To improve the operational efficiency of the bank. In 2003, this was reconfigured into sixteen area offices. Given the preceding, it was a natural progression when, in 2001, the Bank began in earnest, gained momentum in 2003, and was officially launched on Tuesday, April 27, 2004, with the introduction of a new corporate identity.
First Bank was listed on the Nigerian Stock Exchange (N.S.E.) in March 1971 and has received numerous awards, including the 2008. Nigeria’s best bank 2008, Global Finance magazine Best foreign exchange service provider Global Finance Magazine, Nigeria, 2008.
Petroleum Technology Association of Nigeria Financial Institution Award, 2008 Best Manufacturing Financing Bank 2008 Nigerian Bankers Award Nigerian Superbrands Award, 2008. 2008 Diamond Award 2008 Youth and Gender Network In 2007, the External Award included the quoted company of the year. Nigeria Stock Exchange, 31st Annual President’s Merit Award, 2007.
The Nigeria Stock Exchange 2007 Annual Reports and Accounts deserve an award. 2007 Nigeria Stock Exchange Furthermore, the bank of event time received the Nigerian Stock Exchange president’s merit award for the best financial report in the banking sector.
In keeping with the bank’s mission statement, “remain true to our name by providing the best financial services possible,” and its brand essence, “reliably dynamic,” the bank will consistently transform itself as it enters its second century of providing qualitative banking to the nation.
The bank had experienced phenomenal growth over the years, with shareholder funds reaching N42 billion in March 2004. In March 2004, the bank’s total assets were N207.18 billion. Furthermore, the profit before tax for the period increased by 33%.
On March 6, 2006, the First Bank of Nigeria Plc. reported a remarkable total of 24.48 percent in gross earnings for the nine months ended December 2005. The gross earnings increased from N40-60 billion in March 2005 to N50.54 billion in March 2006. Profit after tax increased by 33-35 percent, from N8.75 billion to N11.67 billion.
During the review period, the bank actively promoted entrepreneurial, corporate, and national economic development, contributing N13.3 million to the 2008 economist conference organized by the economist magazine and N13.5 million to the 5th Nigerian China Business and Investment Forum.
The 13th Nigerian Economic Summit will cost N12 million. N10 million for the First Edition of the West African Mining Investment Conference 2007, and N8 million for the Charted Institute of Bankers of Nigeria’s First Annual Banking Conference (CIBN).
First Bank currently has seven subsidiaries involved in register ship, trusteeship, insurance, brokerage, merchant banking, SME Financing and Venture Capital, mortgage banking, and pension fund management. Furthermore, the bank provides a broader range of financial services to a diverse customer base through its local and off share offices, which include 396 branch offices (strategically spread across the country) and the head office in Lagos.
REFERENCE
FinscopeNigeria, Enhancing Financial Innovation and Access, 2008.
G. Nwankwo (1981), Nigerian financial system, Macmillan Publishers, London, pp.48,164.
Certificate Program in Microfinance NDIC/CBN Study Guide
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AN ASSESSMENT OF THE CONTRIBUTION OF COMMERCIAL BANKS TO THE ECONOMIC DEVELOPMENT OF NIGERIA (A CASE STUDY OF FIRST BANK OF NIGERIA PLC)
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