DISTRESS IN THE FINANCIAL INDUSTRY: CASES, APPLICATION AND POSSIBLE SOLUTION
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DISTRESS IN THE FINANCIAL INDUSTRY: CASES, APPLICATION AND POSSIBLE SOLUTION
DISTRESS IN THE FINANCIAL INDUSTRY: CASE STUDIES, APPLICATION, AND POSSIBLE SOLUTION
This study is centred on the banking industry’s difficulties, its implications, and potential solutions.
The first chapter discusses the study’s background, the statement of difficulties, the objective of the investigation, and the significance of the study. In addition, the researcher went on to provide a review of the associated reiterative in chapter two.
Furthermore, chapter three discusses the researcher design and methodology (region of study, population, sampling and sample procedure, and data collecting instrument, validation of research instrument, and data collection and analysis method).
She went on to describe data presentation and result summary in chapter four, and discussion of result consequence, recommendation, and possible remedy in chapter five.
DISTRESS IN THE FINANCIAL INDUSTRY: CASE STUDIES, APPLICATION, AND POSSIBLE SOLUTION
1.1 INTRODUCTION
The study is about financial crisis in the banking industry, its origins, repercussions, and potential solutions. Bank distress occurs when a bank or a bank in the system experiences liquidity or insolvency, causing depositors to fear the loss of their deposits and, as a result, a breakdown in contractual obligations.
A bank is said to be liquid when it cannot meet its liabilities, such as when they are due for payment. Insolvency occurs when the worth of a company’s realisable assets is less than the total value of its liabilities (“a case of negative network”). The cold caused an overall ruin as depositors lost faith in the system and avoided capital loss.
Bank hardship means something different to various people. Some people believe that bank distress happens only when a bank ceases to operate, even if it has not been officially liquidated.
In a more heated debate, a bank is said to be officially distressed if it has failed in archiving and of the goal for which it was founded.
The goal of this research, among others, is to access financial distress in the banking industry in order to determine its forms, causes, and implications, as well as alternative solutions.
1.2 BACKGROUND OF THE STUDY
There is distress in the entire environment, including industry, law enforcement, education, communication, transportation, and other services. Perhaps the most dangerous and visible today is distress in the banking industry, a people- and confidence-based industry that is expected to be a catalyst rather than a detonator of economic advancement.
It is critical to increase the level of the banking business in Nigeria because financial distress in the banking industry causes instability in the country.
The important role of banks in economic growth and development explains why each economy takes financial crises seriously. Any worthwhile economy finds methods to prevent such economic suffering failure.
Banking is a key link in any economy, connecting deficit and surplus, dreams and trade, theory and industry. Evidence shows that there are more distressed banks in Nigeria. How long will we be in this dreadful state? Is there any way to solve the problem?
1.3 STATEMENT OF THE PROBLEM
Most banks industries are experiencing financial difficulties, which is resulting in a lack of capital to satisfy consumer withdrawals on a daily basis. According to Osuala (1987), “The Statement Of A Research Problem” serves to build on the material in the study’s title”
this study is concerned with the investigation into the financial distress of Nigeria’s banking industry.” The external and internal environmental conditions in which the bank operates are frequently mentioned as contributing elements to the banking industry‘s tragic demise. Some of these elements are as follows:
Political unrest leads to low investment and a slowing of productivity.
Inadequate monitoring expertise
Economic slowdown that robs banks of their vibrancy of economic activity due to a high depreciating exchange rate
Regulatory constraints that contribute significantly to the financial system’s sanitization
A bank-wide factor that promotes bad portfolio management.
1.4 OBJECTIVE OF THE STUDY
The purpose of the study denotes the researcher’s goal in conducting the investigation. It is an overview of the study and is particularly relevant to its problems. In light of the difficulty presented, the researcher’s objectives are as follows:
1.To what extent does political insecurity contribute to poor investment?
2. How much bank hardship is caused by a lack of monitoring expertise?
3. Determine the extent to which the economic crisis has deprived the bank of its vigour as a tool in economic activity.
4. Determine the extent to which regulatory constraints have continued to sanitise the banking system.
To determine the extent to which factors within the bank induce poor portfolio management.
1.5 SIGNIFICANCE OF THE STUDY
The study’s significance relates to the value and utility of the research to people, shareholders, management, potential investors, suppliers, the government, and the nation at large.
This provides knowledge and facts that will aid in a better comprehension of the subject under consideration. As a result, the study’s utility ranges from
Assist the Nigerian Central Bank in adopting and improving solutions to mitigate the negative effects of regulatory constraints in the banking system.
Make recommendations to boost economic activity in order to keep the banking business sustainable.
To give basic information on the impact of political insecurity on economic investment.
To ensure an effective solution to the monitoring expertise shortage
The bank suggests a factor that may encourage excellent portfolio management. Assist the federal government in implementing deregulation policies to reduce the spread of debt in Nigeria.
To provide basic information on the impact of the banking industry’s financial turmoil on the Nigerian economy.
Give a beneficial solution to a bank in Nigeria that is already in trouble.
To regulate the high rate of fraud and financial embezzlement in the banking industry, the provisions of the decree unfailed bank and financial malpractices in banks degree NO.14 of 1994 should be strictly enforced.
Banks should also be encouraged to restructure and emerge together in order to play their essential role and survive in the economy.
1.6 DEFINITION OF TERMS
Liquidation: the permanent suspension of business operations due to insolvency or financial difficulties.
Insolvency: the inability to pay a debt on the due date.
Liquidity: an unhealthy situation or state of inability or weakness that stops one from achieving one’s aims and aspirations. In other words, failure to meet a commitment.
Internal environment: variables mostly inside the bank’s local environment over which the bank has significant influence.
Management ineptitude is defined as a general lack of long-term suppression of managerial expertise or technical know-how in many fields of cooperative enterprise.
Fraud: any act of dishonesty or deceit with the intent of obtaining sole person or collaboration of property or any belonging without the owner’s knowledge or agreement.
Internal control: the entire system of control established by management to carry on the company’s business in an orderly and efficient manner, ensuring adherence to management policies and safeguarding the asset as far as possible the accuracy and liability of the records.
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