STATISTICAL STUDY ON THE IMPACT OF COMMUNITY BANKS ON RURAL AREA (A CASE STUDY OF OBOLLO COMMUNITY BANK (NIG) LTD UDENU ENUGU STATE)
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ABSTRACT
This research work is aimed at knowing impacts of community banks on rural areas using Obollo Community Bank (Nigeria) Limited Udenu, as the case study.
This research was analysis using time series and data collection on the number of people that benefited from loan facility since the inception of the case study that is a period of six years, from 1997 to 2002 so to analyses how the rural masses appreciated the ideal of the community banking in Obollo Community.
TABLE OF CONTENTS
TITLE PAGE
APPROVAL PAGE
DEDICATION
ACKNOWLEDGEMENT
ABSTRACT
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
AIMS AND OBJECTIVES
TIME SERIES ANALYSIS
STATEMENT OF PROBLEMS
SIGNIFICANCE OF STUDY
SCOPE AND LIMITATION OF STUDY
CHAPTER TWO
LITERATURE REVIEW
KINDS OF BANK INSTITUTION
CHAPTER THREE
RESEARCH OF METHODOLOGY
METHOD OF DATA COLLECTION
PROBLEM OF DATA COLLECTION
DATA PRESENTATION
CHAPTER FOUR
CONCLUSION AND RECOMMENDATION
FINDINGS AND CONCLUSION
RECOMMENDATION
REFERENCES
CHAPTER ONE
INTRODUCTION
The introduction of community banking in Nigeria was an innovation, which was greatly influenced the financial sector of our economy. It w as provided basic and ready solutions to some problems that for many years seemed insurmountable. For instance, the country has continued to experience balance of payments difficulties, increasing debt, service burden, and gross depreciation in the exchange value of the Naira, persistence industrial unrest and low productivity. All these are clear manifestation of economic depression. Then, the fundamental concepts of a community bank is to establish a self sustaining financial institution owned and managed by members of a community for the purpose of providing credit, banking and other financial service to its members. Largely by their self recognition and credit worthiness.
First, community banks enhance the economic activities in the rural areas, encouraging development and promoting community ownership.
Secondly, it transformed the tradition rotational credit system in formal banking. The rural dwellers imbedded a banking culture which provided easy loans and better security and management at personal funds. It would therefore not be an over statement to say that community banks succeeded where commercial and merchant banks failed. This is true because the marginalisation of rural people by the other banks had compelled the central bank of Nigeria, some year ago, to issue a directive that specified the number of branches of commercial banks be opened in rural areas, though over 750 of such rural bank sprang up, the problem still persisted. Consequently, the search continued until December 1990 when the first community bank in Nigeria was born in Tudun Wada, Kaduna State. It was established by decree number 46 of 1992 and amended by decree number 97 of 1993, Community Banks soon spread across the hinter land, receiving wide ovation and support from the rural dwellers.
The reason was simple because the difference was clear. A community bank has simple ownership structure. In this set up a Community Development Association (CDA) is the primary promoter of the bank with at least 30% of shares indigenes are also encouraged individually to buy shares not exceeding 5%. The received loans easily without collaterals and become owners of banks located in their environment. In effect a community bank can be said to be the people, the people and for the people. No wonder; today there are about 1,982 community banks in the 36 states of the country and Abuja and provided employment to over 1,5000 people.
According to the executive secretary of the National Board for Community Banks, Alhaji Zakan Isa Chawai, the total assets of these bank stand at over N4 billions while the total deposit so far mobilized is over N3 billions, the country banks also have share holders funds of almost N800 millions while loans and advances of over N1 billion have been given to their customers.
A friend in need, it is said ‘is a friend indeed’. And community banks have proved to be friends in need. Not only because their doors are open for longer hours providing banking services even at weekends and public holidays, but because they have given succor to their customers especially whenever the other banks went on strike. This is another reason why many traders, farmers, manufacturers, and other Nigeria have changed to community banks. But for years after their operation, many of the community banks have not been issued a final license by the central bank of Nigeria. Source of them still operating with provision license even when some have strong equity bases of between N5 millions and N10 millions as against the minimum take off equity of two hundred and fifty thousand naira (N250,000.00).
Perhaps a lot more is expected of the community banks especially in these days of Nigerians distressed economy. The National Board for Community Banks (NBCB), which was inaugurated on Tuesday, July 16 1991 to take control of all the community banks in the country. Still has a lot of work to do if the community banking system must grow rapidly to save the development need of the grass root throughout the country. The NBCB is grateful to government for the opportunity given to it to:
- Evolve a modern banking scheme adapted to the Nigeria indigenous culture.
- Devise a credit scheme that makes loan accessibility at the grass root a thing at joy.
- Awaka the innovativeness and creativeness of Nigeria producer who can now earn the elusive foreign exchange through embarking on productive venture.
- Provide a sound basis for grass roots development
TIME SERIES ANALYSIS
| YEAR | QUARTER 1 | QUARTER 2 | QUARTER 3 | QUARTER 4 |
| 19971998
1999 2000 2001 2002 |
147206
266 260 308 354 |
162234
261 268 325 348 |
172248
248 276 341 360 |
189259
249 290 338 345 |
ISOLATING THE TREND USING AVERAGE METHOD
| YEAR | QUARTER | ACTUALDATA | 4 QUARTERMOVING | 3 QUARTER | TREND | |
| 1997 | 12
3 4 |
147163
172 189 |
671 730 |
1401 1531 |
175.13 191.38 |
98.21 98.76 |
| 1998 | 12
3 4 |
206234
248 259 |
801877
947 1007 |
16781824
1954 2044 |
209.75228.0
224.25 255.5 |
98.21102.63
101.54 101.37 |
| 1999 | 12
3 4 |
266261
248 249 |
10371034
1024 1018 |
20712038
2042 2043 |
258.88257.25
255.25 255.38 |
102.75101.46
97.16 95.50 |
| 2000 | 12
3 4 |
260268
276 290 |
10251053
1093 1142 |
20782146
2235 2341 |
259.75368.25
279.38 292.63 |
100.6999.91
98.79 99.10 |
| 2001 | 12
3 4 |
308325
341 358 |
11991264
1332 1378 |
24632596
2710 2779 |
307.58338.75
347.38 347.38 |
100.04100.66
103.06 103.06 |
| 2002 | 12
3 4 |
354348
360 345 |
14011420
1407 |
28212829 | 352.63353.63 | 100.3998.41 |
SEASONAL INDEX FOR EACH QUARTER
Percentage for corresponding quarter over all the years is then average to give a representative index for each quarter.
| YEAR | QUARTER 1 | QUARTER 2 | QUARTER 3 | QUARTER 4 |
| 19971998
1999 2000 2001 2002 |
-988.21
102.75 100.09 100.04 100.39 |
-102.63
101.46 99.91 100.15 98.41 |
98.21101.54
97.16 98.79 100.66 |
98.76101.37
95.50 99.10 103.06 |
| TotalAVE | 501.48100.30 | 502.56100.51 | 496.3699.27 | 497.7999.56 = |
| 3.v(Adj) | 100.39 | 100.60 | 99.36 | 99.65 = |
To adjust the quarterly average in order to obtain the seasonal index. The average 399.63, we use 400 divided adjusted seasonal variation.
FORECASTING THE NUMBER OF CUSTOMER THAT WILL BANK IN DEPOSIT ACCOUNT FOR QUARTERS OF 2003/2004
This can be achieved by multiplying forecasted trend with seasonal index of each quarter ie.
Actual data = forecasted x seasonal index when multiplicative index is used.
The forecasted trend from least squares method got in regression analysis is used.
| YEAR | QUARTER | PROJECTTREND | SEASONALINDEX | FORECASTED NO OF CUSTOMERS (ACTUAL DATA = TXS)/100 |
| 2004 | 12
3 4 |
879388
397 405 |
100.39100.60
99.36 99.65 |
882390
394 404 |
| 2005 | 12
3 4 |
414423
431 440 |
100.39100.60
99.36 99.65 |
416426
428 438 |
INTERPRETATION OF RESULTS
Regressive Analysis: Using the techniques seen above, the regression lime Y = 160.54 + 8.74x was obtained which helps easily to extrapolate the future trend values. The value 160.54 is the intercept of y and x axes while 8.74 are the slope.
To predict the trend for quarter of 2004 and 2005, just substitute 25, 26, 27 …… 32 into the equation y = 160.54 + 8.74X to get the project trend.
TIME SERIES ANALYSIS: The graph of time series showing the number of customers who do bank in deposit accounts at the Obollo Community Bank (Nigeria) Limited Udenu, Enugu State as 1997 t o 2002 was constructed using the lime of best fit got from Regression Analysis, Y = 160.54 + 8.74X. It was find out that the trend was find out that the trend was an up ward trend showing the rate of growth of performance of the bank which made the people to always coming to deposit with them. it can also be seen that the rate of growth decline in 1999, may be because of socio-political climate in 1999 later rise in 2002.
When the trend was isolated with moving average method using multiplicative model, the cyclical and irregular movement of the series are eliminated leaving Actual data = Trend X Seasonal Variation.
Seasonal variation (expressed in %) = Actual data.