SAVINGS MOBILIZATION FOR ECONOMIC DEVELOPMENT IN NIGERIA BANKING INDUSTRY (1990 – 2004) (A CASE STUDY OF UNION BANK OF NIGERIA PLC)
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SAVINGS MOBILIZATION
FOR ECONOMIC DEVELOPMENT IN NIGERIA BANKING INDUSTRY (1990 – 2004)
(A CASE STUDY OF
UNION BANK OF NIGERIA PLC)
ABSTRACT
The research was based on the topic
“mobilizing Domestics savings for economic growth and development in the
banking industry. (A case study of Union Bank of Nig PLC 1999 – 2000. In
carrying out this research, I examined thoroughly. The various factors, which
militates severely against the effective and efficient mobilization of domestic
savings these factors were identified to range from the level of income earned
of the saver. The interest rate that the bank pays on depots of customers, to
the effect of bank distress syndrome in the banking industry. Efforts
were geared towards recommending various measures the bank can use to improve
greater mobilization of domestic resources in our bank. The various ways
through which an increase in domestic savings mobilization can also effect on
increase in economic growth and development were also identified. These include
granting of loans and overdraft of to deficit customer, assisting in the
provision of amenities to the host community generating employment and affirming
of scholarship and promotional programmes. The research was accomplished
through the use of questionnaires and secondary data. The testing and analysis
of relevant data obtained were done through the use of chi – square statistical
test techniques.
TABLE OF CONTENTS
CHAPTER
ONE
INTRODUCTION
1.1
Background of study
1.2
Statement of
Problem
1.3
Purpose / Objective of
Study
1.4
Research
Questions
1.5
Significance of the Study
1.6
Scope , Limitations and Delimitation
1.7
Definitions of Terms
CHAPTER
TWO
Review of related literature
2.1
Domestic Financial Resource Mobilization
Efforts of the
Nigeria Financial System
2.2 Principal Sources
of Savings
2.3 Constraints to
Effective Mobilization of
Savings for Economic
Growth and Development
2.4
Effect of Bank Distress in Mobilization of Savings.
2.5
Effects Of Income Earned To Savings Mobilization
2.6
Effect Of Interest Rate In Mobilization
Of Domestic Savings
2.7
Strategies for Improving Mobilization Or
Savings in Union Bank
of Nigeria Plc
CHAPTER
THREE
Research Design and
Methodology
3.1 Research
design
3.2 Area of
Study
3.3 Population
3.4 Sample and
Sampling Techniques
3.5 Instruments of
data collection
3.6 Methods of Data
Analysis
CHAPTER
FOUR
Data Presentation and
analysis
4.1 Data
Presentation
CHAPTER
FIVE
Findings Recommendations and
conclusion
5.1 Summary of
Findings
5.2
Conclusion
5.3
Recommendation
Bibliography
Appendix
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
It
has been acknowledged that the banking play a catalytic role in t he process of
economic growth and development. This acknowledgement is reinforced by
contemporary conceptualism to the effect that banks are a veritable vehicle for
mobilizing resources from surplus units and tempting same to deficit unit.
Banks constitute perhaps the most important segment of the financial market and
played a dominate role in not mobilizing savings, but also allocating
them for investment purposes.
In Nigeria, domestic savings rate is relatively low compared to most other
developing countries with the same for capital income level. In the past,
investment rates were high and hence there was no problem for raising funds.
In this present economic dispensation, the drive for savings deposit has
been stepped up by banks and non- bank financial institutions. It is However
not sufficient because the range and type of financial assets available are
equally important. There is a wide range of saving instruments offered banks
and non – bank financial institutions in Nigeria today.
Most of the voluntary and non – contractual financial savings consist of
savings and time deposit.
Another area some banks are foreseeing to mobilize funds today is the montage
saving: because large number of Nigerians need accommodation of their own but
fund it difficult with their menage income. Interest payment a demand deposits
accounts has also some positive impact on the propensity to save. Bank have
also been allowed by the government to open domaliary account for
Nigerian exporters in which proceed of experts can be paid or saved until when
they are needed. Transaction costs related to operating a new accounts
and making deposits and withdrawals are now be coming relatively easier
particularly for small savers. There is also the pension scheme which seeks to
induce depositors to invest small sums of money over a specified period of time
in the hope of receiving a stream of benefits upon reacting the age of
retirement.
The crisis of confidence in our banks is a great set back for the banking
system. In the past the majority of those who patronized the banks did so
in order to find safer place for their money. But because of the lack of
confidence in banks today sizeable amount of Nigerians keep their
currency or cash at home.
This winders the financial intermediaries function of intermediation. Most of
our industries depend on commercial bank assistance in form of overdraft short
term and long loans for effective operation. According to Adewume W. (1996)
mobilizing domestic resources for economic development.
1.2
STATEMENT OF PROBLEM
Income is the
greatest constraint to savings mobilization. The low level of income among the
people in Nigeria constituting a limiting factor to savings mobilization. The
inadequate banking facilities in the economy in general and the rural areas in
particular also constitute an obstacle to wide savings mobilization.
Another factor that may affect savings mobilization is the absence of affective
a realistic interest rate policy that rewards savers with adequate return on
their savings. In as mush as the rate of interested adjusted for
inflation runs negative, savings are likely to remain low
1.3
OBJECTIVES OF ITS STUDY
The aim of the study is to examine
available ways of achieving greater mobilization of savings and its efficient
and effective channeling for economic growth the research aims at .
1.
Recommending measures for improving greater mobilization of domestic resources
in our bank.
2.
Identifying the means throughout which the mobilized funds can effectively be
channeled to the growth and development of economy.
3.
Identifying the effect of interest rate mobilization of domestic
savings.
4.
Identifying the effect of bank distress in deposit acquisition.
5.
Determining the effects of income earned to
savings mobilization.
1.4
RESEARCH QUESTION
(1)
Has there been an improvement measure towards achieving greater dogmatic
resources in our bank?
(2)
Does
the mobilization of domestic savings contribute in the economic growth of the
economy?
(3)
Does
the interest rate charges on the mobilization of domestic savings
positive?
(4)
Does
the bank distress syndrome have any significant effect to the deposit
acquisition?
(5)
Does
the propensity to save income earned have effect on the mobilized savings of
the bank?
1.5
SIGNIFICANCE OF THE STUDY
This study intends to elicit body of
knowledge and understanding of the problem of mobilizing domestic savings by
banks. It is expected. That of the recommendations of this research are
implemented it will help to change the banking habits of people. It will also
help the managers and staff of banking industry in Nigeria to improve on their
fund mobilization strategy.
Researchers / students, lectures and the generated public will also fund the
findings and recommendations of their research of value various interest areas,
especially those who may wish to carry out further study on the topic in any
other relate filed.
1.6
DEFINITION OF TERMS
Savings:
This
is that part of income that is not consumed
immediately but
deferred for investment or future consumption.
Domestic Savings: This
consist savings from the citizens
of the country and
not from foreigners.
CBN:
Central Bank of
Nigeria the apex financial
institution in the
country.
Nigerian Banking
Industry: These countries of the
banking institutions
in the country which include the commercial banks, Merchant banks, development
banks etc. with the control Apex Bank CBN.
Union Bank of Nigeria
PLC: This is of the leading
banks in the country
both by deposit and assets wish 283 branches.
Banker: A
banker could be send to be one who works in
on institution
licensed to carry on the business of banking.
Distress: A
bank may be classified distress when it is
unable to meet
the bank examination rating system.
BOFID:
Banks and other financial
institutions Decree.
Rural Banking :
This involves the establishment of
banks in rural areas
to cultivate banking habit among the rural
areas.
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