DOMESTIC SAVINGS MOBILISATION FOR BANKING INDUSTRY ECONOMIC GROWTH AND DEVELOPMENT
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DOMESTIC SAVINGS MOBILISATION FOR BANKING INDUSTRY ECONOMIC GROWTH AND DEVELOPMENT
INTRODUCTION TO CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
It is well known that banking, among other things, plays a catalytic role in the process of economic growth and development. This recognition is bolstered by current conceptualism, which holds that banks are a true instrument for mobilising resources from surplus units and luring them to deficit units.
Banks are undoubtedly the most important component of the financial industry, having a disproportionate role not only in mobilising savings, but also in allocating them for investment purposes.
Domestic savings in Nigeria are quite low as compared to most other emerging countries with comparable capital income levels. Previously, investment rates were high, thus raising funds was not an issue.
Banks and non-bank financial organisations have increased their efforts to encourage savings deposits in the current economic climate. It is not adequate to rely on Hoover because the variety and sort of financial assets available are equally essential. In Nigeria today, banks and non-bank financial firms offer a diverse range of saving options.
However, the majority of voluntary and non-contractual financial savings are made up of savings and time deposits. Despite the fact that other types of deposits, such as savings certificates and premium savings bonds,
play a miner rate, banks and non-bank (Monetary Institutions are now competing strongly among them instruments including additional frame benefits almost banks are now offering contractual forms of savings aimed at persuading depositors to invest in long term deposits.
Another area in which some banks are planning to mobilise funds today is montage saving: a big number of Nigerians require their own housing but find it difficult to fund it with their meagre salary. Interest payments on demand deposits have a beneficial effect on the tendency to save.
The government has also authorised banks to open domaliary accounts for Nigerian exporters in which expert fees can be paid or stored until they are needed. Transaction expenses associated with opening new accounts and making deposits and withdrawals are now becoming more affordable, especially for small savers.
There is also the pension programme, which aims to entice depositors to invest small quantities of money over a certain period of time in the hope of obtaining a stream of benefits when they reach the retirement age.
The crisis of confidence in our banks, on the other hand, is a major setback for the banking system. Historically, the bulk of persons who used banks did so to locate a safer home for their money. And for many years, the character of the country’s banks was that of a currency storage facility.
However, due to a lack of trust in banks, a sizable number of Nigerians now retain their currency or cash at home, leaving the majority of cash unclaimed by banks. This one depositor, according to Withstanding et al (1996:133), results in cash drains. A cash drain, in the broadest definition, is any type of monetary loss incurred by a bank.
This complicates the intermediation function of financial intermediaries. For effective operation, most of our industries rely on commercial bank assistance in the form of overdrafts, short-term and long-term loans.
1.2 STSATEMENT OF THE PROBLEM
Income is the most significant limitation to saving mobilisation. The general low level of income among Nigerians is a constraint to savings mobilisation. Inadequate banking facilities in the economy in general, and in rural areas in particular, are also an impediment to widespread savings mobilisation.
The increasing frequency of breaches, insider abuses, and malpractice all work together in an unholy alliance to weaken public trust in financial institutions and do painful harm to whatever level of banking habit has been built.
Another element influencing savings mobilisation is the lack of an effective and realistic interest rate policy that rewards savers with an acceptable return on their investments. It is stated that as long as the interest rate adjusted for inflation is negative. Savings will most likely remain low.
Perhaps the most serious issue in this country is that we have a cash economy. Handlers prevent financial intermediaries from completing their duties.
The practise limits the ability of banking institutions to mobilise funds, resulting in banks creating a modest number of deposits in relation to the amount requested as loan by the economy.
1.3 THE OBJECTIVES OF THE STUDY
The study’s goal is to investigate available methods of increasing savings mobilisation and its efficient and effective channelling for economic growth.
1. Recommending steps to improve higher mobilisation of domestic resources in our bank.
2. Identifying the channels through which the mobilised funds can be successfully channelled to the economy’s growth and development.
3. Identifying the impact of interest rate mobilisation on domestic savings.
4. Identifying the impact of bank distress on deposit acquisition.
Identifying the effects of earned income on savings mobilisation.
1.4 THE RESEARCH QUESTION
(1) Is there an improvement measure in place to achieve greater dogmatic resources in our bank?
(2) Does the mobilisation of domestic savings assist to the economy’s economic growth?
(3) Is the impact of interest rate levies on domestic savings mobilisation positive?
(4) Does the bank distress syndrome have a substantial impact on deposit acquisition?
(5) Does the proclivity to save earned money have an effect on the bank’s mobilised savings?
1.5 RESEARCH HYPOTHESIS
The following hypothesis was developed to determine the validity and volubility of the information gathered.
(1) H0: No improvement measures have been implemented in our bank to increase domestic resources.
H1: Improvement measures have been implemented in our bank in order to increase domestic resources.
(2) H0: Mobilisation of domestic savings and economic progress.
H1: Mobilisation of domestic savings contributes to economic growth and development.
(3) H0: Interest rates have no effect on the mobilisation of domestic savings.
H1: The interest rate influences the mobilisation of domestic savings.
4. H0: Bank difficulty has no substantial impact on deposit acquisition.
5. H0: There is no significant association between people’s earnings and the bank’s mobilisation of domestic deposits.
H1: There is a considerable association between people’s earnings and the bank’s mobilisation of domestic savings.
H1: There is a considerable association between people’s earnings and the bank’s mobilisation of domestic savings. 1:Hh
(Iii) H0: There is no significant association between domestic savings mobilisation and economic progress.
H1: There is a considerable association between domestic savings mobilisation and economic progress.
1.6 THESIGNIFICANCE OF THE STUDY
The purpose of this study is to elicit a body of knowledge and understanding on the problem of banks mobilising domestic savings. It is to be expected. If the recommendations of this study are executed,
it will help to modify people’s banking habits. It would also assist managers and personnel in the Nigerian banking industry in improving their fund mobilisation approach.
Researchers/students, lecturers, and the general public will also fund the findings and recommendations of their research in numerous fields of interest, particularly those who intend to conduct additional research on the topic in any other related field.
1.7 SCOPE LIMITATIONS AND DELIVERY LIMITATIONS
The study looks at how domestic savings might be mobilised for economic growth and development. The paper discusses the importance of mobilising domestic savings, the tactics used by banks to mobilise these savings,
and the issues involved with mobilisation. It also takes a broad view of how to improve the bank’s mobilisation of domestic resources, which in turn boosts economic growth.
The researcher conducts a comprehensive examination of the research issue before narrowing it down to the efforts of the Union Bank of Nigeria PLC in mobilising these domestic monies. During this study, the researcher encountered the following constraints:
TIME: – Time was a major limitation, given that the work had to be completed alongside the researcher’s other academic commitments, as well as the little time required to submit this work due to a relatively short semester.
FINANCE: This was another element because the researcher funds the cost of gathering and analysing information (both primary and secondary), costs of typesetting, photocopying materials, and binding, and other expenses necessary for the proper completion of this study.
1.8 DEFINITION OF TERMS
SAVINGS: This is the portion of income that is not consumed right away but is delayed for investment or future consumption.
DOMESTIC SAVINGS: These are savings made by citizens of the country rather than by foreigners.
CBN: Central Bank of Nigeria, the country’s apex financial institution.
NIGERIAN BANKING INDUSTRY: This country’s banking institutions, which comprise commercial banks, merchant banks, development banks, and so on, with the control bank at the apex.
UNION BANK OF NIGERIA PLC: This is one of the country’s largest banks in terms of deposits and assets, with 283 branches.
BANKER: A banker is someone who works in a financial institution that is licenced to conduct banking transactions.
DEPOSITORS: Bank customers who keep money or value in the bank under contractual terms.
DISTRESS: A bank may be classed as distressed if it is unable to meet the requirements of the bank examination rating system.
Banks and other financial institutions Decree (BOFID).
RURAL BANKING: This entails the construction of banks in rural regions in order to instill a banking habit among rural dovellers.
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