AN EXAMINATION OF THE TECHNIQUES OF MANAGING FINANCIAL DISTRESS IN THE NIGERIA BANKING INDUSTRY

 

 

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ABSTRACT

The researcher examines the technique of managing financial distress in the Nigerian banking industry. The researchers purpose of study among other.

To examine bank recapitalisation as a technique of managing distress in the banking industry.

To examine debt recovery and cost reductive as a technique of managing distress in the banking industry.
To examine bank acquisition and merger as technique of managing distress in the Nigeria banking industry.
The researcher collected the necessary data through structural questionnaire and oral interview. In analyzing the data collected, the researcher made use of textual and tabular presentation.
In both case chi-square and simple percentage where the major tools used for data ananlysis.

The findings revealed among other things.
(1) That bank needs to be recapitulated.
(2) That two or more distressed banks need to merge to from a new, strong and healthy one.
(3) That banks need to recover their debts to ensure their continuing existence.

A strong bank should take over a small and weak bank to enhance its survival and performance. It was also discovered that excessive operational cost is one of the factors that led to bank distress.

 

TABLE OF CONTENTS

CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF PROBLEM
1.3 OBJECTIVE OF THE STUDY
1.4 RESEARCH QUESTION
1.5 RESEARCH HYPOTHESIS
1.6 SIGNIFICANCE OF STUDY
1.7 SCOPE, LIMITED AND DELIMITATIONS
1.8 DEFINITION OF TERMS

REFERNCE

CHAPTER TWO
2.0 REVIEW OF RELATED LITERATURE …………………………
2.1 INTRODUCTION TO EXAMINATION OF THE
TECHNIQUES OF MANAGING FINANCIAL
DISTRESS IN THE NIGERIAN BANKING INDUSTRY.
2.1 BANKING RECAPITALIZATION…………………………………..
2.2 THE ROLE OF CAPITAL IN BANKING…………………………….
2.3 COMPONENTS OF BANK CAPITAL………………………………
2.4 MAJOR OPTIONS IN BANK RECAPITALISATION………………
2.5 FOREIGN INVESTMENT OPTION IN BANK RECAPITALISATION……………………………………………….
2.6 DEBT RECOVERY AND COST REDUCTION…………………….
2.7 LOAN RECOVERY STRATEGICS ……………………………….
2.8 BANK AQUSITION AND MERGER ………………………………
2.9 RESTRUTURE AND SELL OPTION
REFERENCE
CHAPTER THREE

3.0 RESEARCH DESIGN AND METHODOLGY
3.1 RESEARCH DESIGN
3.2 METHODS OF INVESTIGATION
3.3 RESEARCH POPULATION
3.4 SAMPLING SIZE DETERMINATION
3.5 SAMPLE TECHNIQUES
3.6 RESEARCH INSTRUMENT USED
3.7 METHOD OF PRESENTATION
3.8 TECHNIQUES OF DATA ANANLYSIS

CHAPTER FOUR
4.0 PRESENTATION OF DATA AND ANANLYSIS
4.1 DATA PRESENTATION ANANLYSIS
4.2 TESTING OF HYPOTHESIS

CHAPTER FIVE
5.0 FINDINGS, CONCLUSION AND RECOMMENDATION
5.1 FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATION
BIBILIGRAPHY
APPEDIX
(1) LETER TO THE RESPONDENTS
(2) QUESTIONNAIRES

 

CHAPTER ONE

1.0 INTRODUCTION
1.1 BACKGROUND OF STUDY
The issue of financial distress in the Nigerian banking industry has became the ‘Conequences of bnak failures, the problem has became a major source of concern to the government, the regulatons of financial institutions and to the general public. The experience of Nigerians during the first era of bank failures in Nigerian between 1953 to 1959 was such that generated understandable apprehension among the banking public. Unfortunately, the problem has reducing up till now in the Nigerian financial system. Also distress in Nigerian banking system is a phenomenon that must be tackle with every amount of Vigour in order to minimize its occurrence in the economy.
Although, Nigerian thought this was a good own for the economy, it soon downed on them that the perceived boom was a mirage and gross mismanagement. The increasing number of distress in the nations banking industry has impacted negatively on the economy by slowing down the tempo of business activities. The courage also effects some government and some healthly banks which have cost some of the confidence which they had enjoyed before the issue of banking distress become pronounced.

1.2 STATEMENT OF PROBLEMS
Financial distress in the Nigeria banking industry will therefore occure when a fairly reasonable proportion of banks in the system are unable to meet their obligations to their customer as well as their owners and the economy as a result of weakness in their financial, operational and managerial condition which have rendered them either insolvent. Also is a situation in which a sizable

 

 

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THE ROLE OF FINANCIAL INSTITUTIONS IN EXPORT FINANCING IN NIGERIA FROM 2006 –2012

(A CASE STUDY OF FIRST BANK OF NIGERIA PLC ONITSHA BRANCH)

 

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ABSTRACT

 

 

The primary objectives of this study was to examine how the financial institution export finance in Nigeria using First Bank of Nigeria Plc Onitsha branch as a case study. In carrying out this study, I used survey method in which I used the questionnaire to collect data. The target population was the staff of first bank of Nigeria Plc Onitsha Branch from which a sample of 80 was drawn. I used research questions and formulated research hypotheses. The relevant literature was reviewed for the study. The data were collected, presented analyzed and hypotheses tested using chi-square. At the end of the study a number of recommendations were made for further studies and on how to improve the Nigeria financial export in Nigeria and how to encourage the institutions for expansion and modernization.

 

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TABLE CONTENTS

CHAPTER ONE: INTRODUCTION

• Background of the Study:……………………………………………………….3

 

 

• Statement of Problems:.………………………………………………

 

 

• Purpose of the Study:………………………………………………………

 

 

• Significance of the Study:………………………………………………

 

 

• Research Questions:………………………………………………………………8

 

 

• Formulation Hypothesis………………:…………..……………9

 

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• Limitation of the Study:……………………………………………………

 

 

• Definition of Terms :…………………………………………………………

 

 

CHAPTER TWO: LITERATURE REVIEW

 

 

• Mexim Annual Statement of Account of 1999

 

 

Foreign  Sources  ……………………………………………

 

 

• Sources of Finance  For  Export  …………………

 

 

• The role of Financial Institution ………………………..………………18

 

 

• Factors Militating  Against  Export

 

 

• Historical Background  to  Export  F

 

 

• Policy Instrument:…………………….…………………………………………

 

 

• Duty Draw  Back/Suspension  Manufac

 

 

CHAPTER THREE: RESEARCH METHODOLOGY

 

 

• Area of  the  Study  :……………………………………

 

 

• Population of  the  study:………………………

 

 

• Sample and Sampling Technique:…………………………………

 

 

• Instrument for  Data  Collection  :…

 

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• Validation of  the  Instruments…..…

 

 

• Distribution and  Retrieval  of  the

 

 

• Method of Data Collection and Analysis:……………………………..…35

 

 

• Analysis:………………………………………………………………

 

 

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

 

 

• Finding and Discussion of Finding Questionnaires

 

 

Distribution………………………………………………………

 

 

CHAPTER FIVE

 

 

• Summary of findings, conclusions and  Recommendatio

 

 

• Summary of Findings:…………………………………………….……

 

 

• Conclusion:……………………………………………………………..………

 

 

• Recommendations:……………………………………………………………

 

Appendix:……………………………………………………………………

Questionnaire  :……………………………………………51

 

Bibliography  :………………………………………………………

 

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CHAPTER ONE

 

THE ROLE OF FINANCIAL INSTITUTIONS IN EXPORT FINANCING IN

 

NIGERIA

 

INTRODUCTION:

 

 

Financial institutions are organizations which deal basically in money.

 

`They constitute the financial framework of an economy. Financial institutions help to pool savings and excess liquidity from millions of individuals and firms within the country and make them available to those who need them for various purposes.

 

Financial institutions include commercial bank (Joint stock banks) discount houses, the central bank, saving banks, development bank (BOI), insurance companies, hire purchase companies, the national providence fund, the stock exchange building etc.

 

Before the introduction Nigeria export- import bank (NEXIM) in Nigeria as at 1999 the commercial banks were generally referred to retail bankers, while merchant banks were known as wholesale bankers.

 

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However the two operate and offer almost the same services that any line of demarcation is now rather fussy- one can only say that the distinguishing factor between the two sectors of the banking industry is that the commercial banks are members of the central bank of Nigeria (CBN) clearing house, While the merchant bank are not members of the Central Bank clearing house.

 

Another contentious factor is the licence granted merchant banks to take companies to capital market which the Nigeria stock exchange denied the commercial licensed them to do so, the introduction of the universal banking system of divide effect. A trader could approach either commercial or merchant bank for financing facility for his transactions. They can provide both short and long term facilities and can design any product which meets any requirements of customers.

 

The Nigeria export-import bank (NEXIM) was established in 1988 but commenced operations in January 1991. The bank was established to provide mainly short term financing for exporters who need working capital to buy hair activities. Among the function of the banks is the maintenance of a foreign exchange revolution fund which

 

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is to be made available as loans to exporters who need to export machineries, raw materials and spare parts to satisfy export orders. It can also consider loans involving domestic trade which are likely to assist exports.

 

• BACKGROUND OF THE STUDY

 

 

The banking system has been integral part of the structural reforms and it has a leading role in management of policy change. The role of financial institutions in export financing is that of a cartelist and a committed broker. It ranges from assisting company and individual on how to enter export market through financing and handing shipping document and collect export proceedings.

 

Generally an export can meet his financing needs in the following number of ways.

 

 

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THE ROLE OF MICROFINANCE BANKS IN THE ALLEVIATION OF POVERTY IN NIGERIA.

( A Case Study of Oha Microfinance Bank Ogui Road Branch, Enugu State)

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ABSTRACT

This study explores the immense role of the microfinance banks in the alleviation of poverty in Nigeria. The researcher revealed that the rate at which rural dwellers deposit their money in their pillows rather than in microfinance banks is high. Data were collected through primary and secondary sources. As regarded to primary sources, questionnaires and interviewed were used. The chi-square (x²) method was used for testing of hypotheses. Responses to the questionnaires were analyzed using percentage method of analysis. Based on the findings of this study, an attempt on the role of microfinancing as stimulus to poverty alleviation in Nigeria may lack adequate knowledge of various financial transactions available and how the rural dwellers can access them. In conclusion, it hoped that the recommendation will help the microfinance banks to strengthen its weakness for better and effective services in order to achieve its sets of goals and socio-economic advancement for the alleviation of poverty in Nigeria.

 

TABLE OF CONTENT

CHAPTER ONE: INTRODUCTION

 

1.1   Background of the study————————————————————–1

 

1.2   Statement of problems—————————————————————-4

 

1.3   Objectives of the study—————————————————————-6

 

1.4   Research Hypothesis——————————————————————6

 

1.5   Research questions——————————————————————–7

 

1.6   Significance of the study————————————————————–7

 

1.7   Scope of the study———————————————————————8

 

1.8   Limitations of the study————————————————————–8

 

 

 

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CHAPTER TWO: LITERATURE REVIEW

 

2.1   Overview of microfinance activities in Nigeria———————————–10

 

2.2   Justification for the establishment of microfinance institutions————-16

 

2.3   Microfinance policies and goals—————————————————19

 

• Contributions of government in alleviation of

 

poverty through establishment of microfinance banks———————–23

 

• The rate at which rural dwellers are not able to repay

 

their loans—————————————————————————26

 

2.6   Supervision of microfinance banks—— —————————————-28

 

2.7   Roles and responsibilities of stakeholders————————————–30

 

 

 

 

CHAPTER THREE: RESEARCH METHODOLOGY

 

3.1   Research Design———————————————————————33

 

3.2   Sources of data collection———————————————————–33

 

3.3   Methods of data collection———————————————————34

 

3.3.1  Primary data————————————————————————-34

 

3.3.2  Secondary data———————————————————————-35

 

3.4   Determination of population size————————————————-35

 

3.5   Determination of sample size—————————————————–35

 

 

 

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3.6   Sample procedures—————————————————————36

 

3.7   Method of data analysis———————————————————-37

 

3.8   Decision rule———————————————————————–38

 

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

 

4.1   Data presentation—————————————————————–39

 

4.2   Summary of responses———————————————————–39

 

4.3   Test of hypothesis—————————————————————–48

 

 

 

 

CHAPTER   FIVE:   SUMMARY   OF   FINDINGS,   CONCLUSIONS   AND

 

RECOMMENDATIONS

 

5.1   Summary of Findings————————————————————–55

 

5.2   Conclusion————————————————————————–56

 

5.3   Recommendations—————————————————————–56

 

BIBILOGRAPHY——————————————————————-58

 

APPENDIX A———————————————————————–60

 

APPENDIX B—————————————————————————61

 

 

APPENDIX C—————————————————————————63

 

 

 

 

 

 

 

 

 

 

 

 

 

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CHAPTER ONE

 

 

INTRODUCTION

 

 

1.1:  BACKGROND OF THE STUDY

 

 

A robust economic growth cannot be achieved without putting in place well focused programme to reduce poverty through empowering the people by increasing their access to factors of production.

 

The latent capacity of the poor for entrepreneurship would be significantly enhanced through the provision of microfinance services to enable them engage in economic activities and be more self-reliant, increase employment opportunities, enhance household income and create wealth. Micro-financing has existed for years before the introduction of conventional banking in Nigeria and the later part of nineteenth century. (Ekot, 2008)

 

The traditional Nigerian society has a system of group savings and assistance to one another. The practice was that a group of people who had needs for some form of capital or lump sum to execute a particular project which they could not raise adequate savings on their own, usually come together to form a savings group. The group may be named after the leader who is usually the initiator of the venture. The traditional microfinance institutions provide

 

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access to credit for the rural and urban low-income earners. These are mainly the informal self-help groups such as Isusu,women association like one obtainable during popular August meetings,

 

Umu–ada progressive women association. Other providers of microfinance services include savings collectors and co-operatives.

 

(CBN brief, 2005)

 

 

The unwillingness and inability of the formal financial institutions is to provide financial services to the urban and rural poor, coupled with unsustainability of government sponsored development financial schemes, contributed to the increase in number of private sector led micro finance in Nigeria. Thus, before the emergence of microfinance institutions, informal microfinance activities flourished all over the country. The Central Bank of

 

Nigeria (CBN) as at end of December 2009 gave an approval to 840 microfinance banks to begin operation in the country. (CBN briefs, 2008-2009)

 

Microfinance banking is about providing financial services to the economically active poor and low income household, who are traditionally not served by the conventional financial institutions.

 

These services include credit savings, micro-leasing, micro-insurance and payment transfers to enable them engage in income generating activities. (Asemota, 2002)

 

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However, the microfinance policy launched on 15^th December 2005 defined the framework for the delivery of these financial services on a sustainable basis to the micro, small and medium enterprises (MSMES) through privately owned microfinance banks.

 

The Non-governmental Organizations or Microfinance institutions

 

(NGO-MFIS) are also expected to transform to microfinance banks. (Dinye, 2006)

 

Existing Community banks and NGO-MFIS that want to convert and transform respectively to a microfinance bank but do not have the required minimum capital base can increase the share capital by capital injection, merger and acquisition. These would not only enhance monetary stability but also expand the financial infrastructural development of the country to meet the national financial system and provide stimulus for growth and development

 

(Benson, 1985). It would also harmonize operating standards and provide a strategic platform for the evolution of microfinance institution, promote appropriate regulation, supervision and adoption of best practices. The establishment of microfinance banks has become imperative to serve the following purposes:

 

Improve, diversified and create a dependable financial service to the active poor, low-income earners in a timely and competitive manner that would enable them to undertake and develop long-

 

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term, sustainable entrepreneurial activities, mobilize savings for intermediation, create employment opportunities and increase the productivity of active poor and income earners in the country. Thus increasing their individual household income and capacity standard of living, enhance organized and systematic but focused participation of the poor in the social-economic development and resource allocation process. It will also provide veritable avenues for the administration of the micro credit programme of government and high net worth individual on non-resource basis. This policy ensures that state government shall delegate an amount of not less than 10% of their annual budgets for on-lending activities of microfinance banks in favour of their residents and render payment services such as salaries, pension for various tiers of government (Luck,2011).

 

1.2:  STATEMENT OF PROBLEM

 

 

Nigeria consists of different classes of individuals, who are either enterprising or industrial low class that account for over half of the population who do not have access to formal banking services. Savings have continued to grow at a very low rate particularly in the rural areas of Nigeria. One of the problems brought to bear is the inability of rural dwellers to channel their savings into banks. Most rural people keep their resources under their pillows. This

 

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method of keeping savings is risky because it might be stolen, lost

 

 

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THE CONTRIBUTIONS OF INFORMATION TECHNOLOGY IN THE OPERATIONS OF BANKS IN NIGERIA

 

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