SAVINGS MOBILIZATION FOR ECONOMIC DEVELOPMENT IN NIGERIA BANKING INDUSTRY 1990 – 2004
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SAVINGS MOBILIZATION FOR ECONOMIC DEVELOPMENT IN NIGERIA BANKING INDUSTRY 1990 – 2004
SAVINGS MOBILISATION FOR ECONOMIC DEVELOPMENT IN THE BANKING INDUSTRY OF NIGERIA
The study focused on the theme “mobilising domestic savings for economic growth and development in the banking industry” (a case study of Union Bank of Nigeria PLC from 1999 to 2000). I examined thoroughly when conducting my investigation.
The numerous elements that impede the effective and efficient mobilisation of domestic savings have been identified. These aspects include the saver’s level of income. The interest rate that the bank pays on customer depots in response to the banking industry’s bank distress syndrome. Efforts were made to recommend several ways that the bank can employ to boost the mobilisation of domestic resources in our bank.
The numerous ways in which an increase in domestic savings mobilisation can affect economic growth and development have also been recognised. These include extending loans and overdrafts to delinquent customers, assisting in the provision of amenities to the host community, creating jobs, and confirming scholarship and promotional schemes.
The investigation was carried out using questionnaires and secondary data. The relevant data obtained was tested and analysed using chi – square statistical test methodologies.
INTRODUCTION TO CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
Banking has been recognised as playing a catalytic function 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 part of the financial industry, not only mobilising funds but also allocating them for investment purposes.
Domestic savings in Nigeria are relatively low when compared to most other developing countries with the same amount of capital income. 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. However, it is insufficient because the variety and type of financial assets available are also significant. In Nigeria today, banks and non-bank financial firms offer a diverse range of saving options.
The majority of voluntary and non-contractual financial savings are comprised of savings and time deposits.
Another area in which some banks are planning to mobilise funds today is montage saving: a huge number of Nigerians require their own housing but find it difficult to fund it with their menage income. 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 banking system has suffered greatly as a result of the confidence problem in our banks. Historically, the bulk of persons who used banks did so to locate a safer home for their money. However, due to a lack of trust in banks, a sizable number of Nigerians now retain their currency or cash at home.
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. Domestic resource mobilisation for economic development, according to Adewume W. (1996).
1.2 STATEMENT OF THE PROBLEM
The greatest impediment to saving is a lack of income. The low level of income among Nigerians is a limiting factor in the mobilisation of savings. Inadequate banking facilities in the economy in general, and in rural areas in particular, are also a barrier to widespread savings mobilisation.
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. Savings are anticipated to remain low as long as the rate of interest adjusted for inflation remains negative.
1.3 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 the 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. Determining the impact of interest rate mobilisation on domestic savings.
4. Determining the impact of bank distress on deposit acquisition.
5. Determining the effects of earned money on
Mobilisation of savings.
1.4 RESEARCH QUESTIONS
(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 growth?
(3) Are the interest rate levies on domestic savings mobilisation positive?
(4) Does 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 THE SIGNIFICANCE 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.
1.6 DEFINITIONS OF TERMS
Savings: This is the portion of money that is not spent.
instantly but deferred for investment or future use.
Domestic Savings: These are savings made by citizens.
not from outsiders.
CBN: Central Bank of Nigeria, the country’s apex financial institution.
in the country.
Nigerian Banking Industry: These African countries
Banking institutions in the country include commercial banks, merchant banks, development banks, and so on, all of which are controlled by the Apex Bank CBN.
Union Bank of Nigeria PLC: This is one of the largest banks in Nigeria.
Banks in the country, in terms of deposits and assets, want 283 branches.
Banker: A banker is someone who works in finance.
an institution licenced to carry out the business of banking.
When a bank is in trouble, it is classified as such.
unable to meet the bank examination grading system.
Banks and other financial institutions Decree (BOFID).
Rural banking entails the construction of banks in rural areas in order to create a banking habit among the rural population.
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