Financial Distress in Source Commercial Bank: Causes, Consequences, and Potential Solutions
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Financial Distress in Source Commercial Bank: Causes, Consequences, and Potential Solutions
ABSTRACT OF REASONED FINANCIAL DISTRESS IN SOURCE COMMERCIAL BANK, CONSEQUENCES, AND SOLUTION
This study aimed to describe the financial difficulty in various Nigerian commercial banks.
The study also looked at the degree and types of financial hardship faced by source commercial banks, as well as the institutions involved.
It was also determined that distress is caused by inadequate management, insolvency, a low asset base, shortage of capital, and so on.
As a result, commendations such as: insufficient, funding, increased asset base, and arrangements for enough liquidity.
Such research should also be conducted in other non-financial banking institutions and in other West African countries.
REASONED FINANCIAL DISTRESS PROPOSAL IN SOURCE COMMERCIAL BANK, CONSEQUENCES, AND SOLUTION
The primary goal of this study was to assess the causes, effects, and solutions of financial crisis in several commercial banks.
This study has been divided into five (5) chapters for ease of reading and comprehension.
The first chapter discussed the study’s background, problem statement, purpose, research questions, scope of study, limitations of study, significance, rationale, definition of words, and assumptions based on the country’s economy.
It also provides information on the causes of financial difficulty in commercial banks and other financial institutions.
Based on this, the remaining four chapters deserved to affirm the management of distress in Nigerian banks, the assessment of financial hardship, and the measurement of distress in Nigeria. Furthermore, the data sources, limitations, and findings are discussed.
Based on the results above, recommendations have been made to assist in the resolution of financial difficulties in several Nigerian commercial banks.
1.1 BACKGROUND OF THE STUDY
Commercial Banking has grown rapidly in the Nigerian banking sector over the previous decade, both in terms of the number of institutions and the type of financial services provided.
As bank expansion was liberalised, so was the fear of instability fostered in these banking systems at times.
As the expansion trend continues, it is a sign of investors’ lack of vision and the direct purpose of quick return to meet liquidity operations.
The word distress had been in assistance but quickly increased as these institutions increased due to acute shortages of resources and huge withdrawals of deposits from these banks by government agencies and other public sectors.
The financial structure’s development trend exposes and undermines the economic system, affecting the economy’s development. As a result, anguish imposes a significant load on regulation and authority, depresses the economy, undermines the payment system, and discourages savings.
1.2 STATEMENT OF THE PROBLEM
Some commercial banks have been segmented to help with loans and advances to different segments of the economy.
Commercial banking is often known as retail banking since it accepts deposits and payments from customers.
However, the financial situation of the source of these Commercial Banking is hampered by the ongoing political insecurity/lactory campaign.
According to political analysts, the allocation was one of the painful crises that were to follow. As a result, these bank customers withdrew their funds at a loss.
These institutes are presently hampered by distress, insolvency, insufficient cash due to deposit deadlines, and lack of confidence. The study was driven by the fact that the crisis had been averted. This study is concerned with describing the financial crisis in several commercial banking systems in Nigeria.
1.3 GOAL OF STUDY
The study’s goals are as follows:
1. Describe the nature and types of financial difficulties.
2. To identify some of the commercial banks implicated in the Nigerian banking crisis.
3. To identify the sources of financial distress in these commercial banks.
4. To ascertain the degree of distress in these commercial banks.
5. Determine whether the distress is the result of bad management.
1.4 THE SIGNIFICANCE OF THE STUDY
The importance of a robust banking system cannot be overstated for a variety of reasons, including the important economic value of long-term deposits at the state level, public trust in employment and careers, and the critical role these institutions play in economic development.
The benefit of determining how to resolve the situation will also be beneficial to investors or clients of these institutions, the regulatory and supervisory authorities, and even the government. The solution will also be beneficial to the general management of these banks.
1.5 FINANCIAL DIFFICULTIES
This is when Financial Institute can no longer manage their financial structure on their own and needs assistance. This could include companies such as Insolence. Poor management, insolvency, a lack of deposits, and so forth.
1.6 THE COMMERCIAL BANK
This type of financial institution is known as a retail bank. They receive and make payments to their consumers on demand.
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