CHAPETR ONE
INTRODUCTION
1.1 Background of the study
1.2 Statement of problem
1.3 Objective of the study
1.4 Research Hypotheses
1.5 Significance of the study
1.6 Scope and limitation of the study
1.7 Definition of terms
1.8 Organization of the study
CHAPETR TWO
LITERATURE REVIEW
CHAPETR THREE
3.0 Research methodology
3.1 sources of data collection
3.3 Population of the study
3.4 Sampling and sampling distribution
3.5 Validation of research instrument
3.6 Method of data analysis
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS AND INTERPRETATION
4.1 Introductions
4.2 Data analysis
CHAPTER FIVE
5.1 Introduction
5.2 Summary
5.3 Conclusion
5.4 Recommendation
Appendix
Abstract
This study is on the role of commercial banks on economic growth in Nigeria. The total population for the study is 200 staff of UBA, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made managers, accountants, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
CHAPTER ONE
INTRODUCTION
- Background of the study
Commercial banks play an important role in economic development of developing countries. Economic development involves investment in various sectors of the economy. The banks collect savings from the people and mobilize savings for investment in industrial project. The investors borrow from banks to finance the projects. Special funds are provided to the investors for the completion of projects. The bank provide a gurantee for industrial loan from international agencies. The foreign capital, flows to developing countries for investment in projects. Commercial banks are involved in the process of increasing the wealth of the economy, particularly the capital goods needed for raising productivity. The developed economies need the service of the banking system to enable the economy attain economic growth, while the developing economies need the service of banking system for sectorial development. The financial institution is therefore, capable of influencing the major saving propensities and opportunity. The need to achieve sustained economic growth within any economy can be possible admist strong financial institution and precisely within the existence of a virile banking system. Their activities must be such that are tailored to work in the congruence with government policies and programmes in a bid to attaining the desired macro-economic objectives as a nation. Schumpeter in 1934 observed that the commercial banking system was one of the key agent in the whole process of development. Generally commercial banks not only facilitate but speed up the process of economic development through making more funds available from resources mobilized.
THE ROLE OF COMMERCIAL BANKS IN ECONOMIC GROWTH IN NIGERIA
The banking system is a catalyst and engine of growth that is responsible for being a lifewire to every sector of the economy. It is evident that no sector in the economy can flourish or prosper without the support and services of the banking sector, agricultural sector, manufacturing sector, mining or even services sector can’t do without banks. Commercial banks provide and encourage savings. The establishment of commercial bank especially in the rural areas makes savings possible, hence economic development is accelerated. Commercial banks provide capital needed for development. Deficit spender unit obtain medium and short term loans and overdraft from commercial banks to start a new industry or to engage in other development efforts. They engage in trade activities through making use of cheques and other financial instrument possible. They encourage investment, provide direct loans to the government and individuals for investment purposes. They provide managerial advices to small-scale industrialists who do not engage in the service of specialist. Commercial banks also render financial advice to their customers including to invest in. Commercial banks create money as an instrument to the apex bank for all its activities. Commercial banks help to enhance development of international trade, these include acting as referees to importers, providing travellers cheque to those going abroad, opening letters of credit as well as providing credit for export. All these helps to promote international trade and relationship between nations, they provide backup liquidity to the economy. They are transmitters of monetary policy and they provide some “value added” from transfering funds from savers to borrowers and providing liquidity. The current credit crisis and the transatlantic mortage financial turmoil have questioned effectiveness of banks consolidation programme as a remedy for financial stabilty and monetary policy in correcting the defects in the financial sector for sustainable development. The consolidation of banks has been the major policy instrument being adopted in correcting deficiencies in the financial sector. The economic rationale for the domestic consolidation is indisputable, an early view of consolidation was that it makes banking more cost efficient because larger banks can eliminate excess capacity in areas like data processing, personnel marketing or overlapping networks. Cost efficiency also could increase if more efficient banks acquired less efficient ones. Consolidation is viewed as the reduction in the number of banks and other deposit taking institutions with a simultaneous increase in size and concentration of the consolidation entities in the sector. The driving forces in bank consolidation include better risk control through the creation of critical mass and economies of scale, advancement of marketing and product initiative improvements in the overall credit risk and technology exploitation. These drivers has lead to improved operational efficiencies and larger and better capitalized institutions.
1.2 STATEMENT OF THE PROBLEM
Given that the economic trend of the commercial banking industry, one wondered what has hindered economic growth, though an important avenue for banks to boost the growth of the economy through efficient and effective saving investment process(financial intermediation) to stimulate investment and productive activities. For the past three decades, the Nigerian economy has not shown any favourable sign of growth. For example, the real GNP growth rate figure was 2.8% in 1995 with negative figures in years like 1982, 0.3% etc as depicted in the CBN periodic bulletin in 1986. This shows that the Nigerian economy is not one that can inspire confidence, if no drastic improvement is shown by financial institutions with its economy especially in the new millenium.
1.In what extent does commercial bank as a financial intermediate contribute towards fund mobilization for economic growth and development of the country.
2.What is the essence of commercial banks in Nigerian economy towards fund mobilization for economic growth and development?
3.What are the problems commercial banks encounter in their performance towards mobilization of funds for economic growth and development?
1.3 OBJECTIVE OF THE STUDY
The objectives of this research work are tactily stated as follows.
-To determine the contribution of commercial banks towards a positive economic growth and wealth creation.
-To examine ways in which the commercial banks in Nigeria can be made to play better roles towards fund mobilization for economic growth and development.
-To analyse the constraints and short comings facing commercial banks in Nigeria towards fund mobilization for economic growth and development.
-To determine and test the effects of some relevant economic variable and factors on the real gross domestic product(GDP) of Nigeria.
1.4 RESEARCH HYPOTHESES
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
H0: Commercial banks do not contribute significantly towards fund mobilization for economic growth and development of the country.
H1: Commercial banks do contribute significantly towards fund mobilization for economic growth and development of the country.
H02: The variables of commercial banks are lending deposits, real investment and interest rate etc do not have any impact in the Nigerian economic sector.
H2: The variables of commercial banks are lending deposits, real investment and interest rate etc do have any impact in the Nigerian economic sector.
1.5 SIGNIFICANCE OF THE STUDY
The study makes clear the actual contributions and operations of commercial banks in Nigeria. It will also sensitize the society on the importance of commercial banks in Nigeria. The study will be important to the policy makers and the federal government in order that to adapt and implement policy measures that will boost the economy through the financial institution. It will also depict the negative and positive side of the activities of the general public and bankers, for some correction and changes in order to boost the economy.
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study covers the role of commercial banks on economic growth in Nigeria. The researcher encounters some constrain which limited the scope of the study;
- a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
- b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
- c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.
1.7 DEFINITION OF TERMS
COMMERCIAL BANNK: A commercial bank is an institution that provides services such as accepting deposits, providing business loans, and offering basic investment products. The main function of a commercial bank is to accept deposit from the public for the purpose of lending money to the borrowers
ECONOMIC GROWTH: Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP.
1.8 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows
Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study
