DEPOSIT MONEY BANK RECAPITALIZATION AND SMALL BUSINESS GROWTH IN NIGERIA
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DEPOSIT MONEY BANK RECAPITALIZATION AND SMALL BUSINESS GROWTH IN NIGERIA
Chapter one
INTRODUCTION
1.1 Background for the Study
Businesses, like people, are not created equal. Some organisations in Nigeria would be profoundly missed if they no longer existed, but life would continue. There are some businesses that, if they fail, will bring down entire economies and nations.
This second group includes the deposit money bank. Deposit money banks are the primary savings mobilisation and financial resource allocation institutions. As a result, their roles position them as a vital sector and a strong foundation of economic growth and development.
Deposit money banks, often known as commercial banks, are financial institutions that accept deposits, provide business and auto loans, mortgage financing, and basic investment products such as savings accounts and certificates of activity deposit.
According to conventional theory, they serve as financial intermediaries, channelling savings to enterprises and individuals seeking cash for their activities.
Their relevance as a driver of economic growth/development is broadly acknowledged by both monetary and development economists. The banking sector, particularly deposit money banks, dominates Nigeria’s financial system and serves as the cornerstone for its development.
Their credit component is an important link between the monetary and real sectors of the Nigerian economy. Deposit money banks must recognise that they have the capacity, scope, and prospects to mobilise financial resources and allocate them to productive investments, so promoting long-term performance and ensuring that businesses thrive and survive.
They not only keep our saved funds and lend us money when we need it, but they also serve as a network of arteries that transmit money throughout the economy, which is why they are commonly referred to as financial intermediaries.
As a result, their primary job is to transfer money in large amounts from individuals who want to lend to those who want to borrow. To function efficiently, an economy, rich or poor, must have well-developed and healthy deposit money banks.
Why? Companies, such as medium and small-scale enterprises, and individuals must borrow money to start a business and then build decent, formidable, and innovative businesses, which serve as the launching pad for any meaningful growth in any developing economy.
This is why Oluyemi (1995) regards deposit money banks as an engine of growth in a country’s economy, which could greatly aid in the promotion of rapid economic growth.
When a financial institution is well-developed and deemed healthy, it can serve as a stimulus for economic growth (Adeoye, 2007). According to a World Bank (1997) study, the banking sector plays an important role in emerging countries’ financial integration.
This is to imply that deposit money banks are inextricably related to the economic progress of any country. In terms of total human functioning, they are analogous to the body and soul.
The proper operation of these banks leads to economic prosperity in a nation. They contribute significantly to a country’s economic progress. They are resource patterns designed to fulfil the needs of medium and small enterprises.
1.2 Statement of Problem
Despite the fact that SMEs have been seen as a bastion for job creation and technical growth in Nigeria, the sector has also suffered from neglect, with negative consequences for the economy. In a seminar titled “Carer Crisis and Financial Distress
– The Way Out,” Mr. Oluseyi Oluboba, General Manager of Enterprise and Financial Support Company Limited, identified in his research that, while the problems of SMEs in Nigeria are numerous, limited access to money and capital markets is one of the most significant challenges faced by SMEs in Nigeria.
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