URBAN BANKING: A TOOL FOR ECONOMIC DEVELOPMENT: (A CASE STUDY OF FIRST BANK OF NIGERIA, BENIN CITY RING ROAD BRANCH)
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URBAN BANKING: A TOOL
FOR ECONOMIC DEVELOPMENT: (A CASE STUDY OF FIRST BANK OF NIGERIA, BENIN CITY
RING ROAD BRANCH)
ABSTRACT
The purpose of this
study is to examine the Urban Banking Scheme as a tool for economic development
with emphasis on the First Bank of Nigeria Plc, Benin City, Ring Road branch.
The over riding problem in Nigeria which affects the development of Urban Banking
is the developed and poorly adopted financial practices which prevail in the
country. The project takes a look at the content to which Urban Banks have been
able to meet the needs of the people through their policies in financing
projects. In chapter one, it looks at the historical background, statement of
problem, research questions, objectives of the study, the significance of the
study, scope of the study, limitation of the study and the definition of terms.
Chapter two, the researcher had to consult so many literatures by several
authors including articles published by many people. so many references have to
be made in the course of writing, before the literature review was finally
produced. In the third chapter, the methodology used in collecting information
was questionnaire and analysis was also done. In chapter four, the presentation
of data collected and findings of the investigations carried out in the Bank
and officials and customers to the Bank is shown. In conclusion, which is
chapter five of the project, policy recommendations and conclusion were made.
TABLE OF CONTENT
CHAPTER ONE
Introduction
Background of the study
Historical background of First Bank of
Nigeria
Statement of problem
Research questions
Objective of the study
Significance of the study
Scope of the study
Limitation of the study
Definition of terms
CHAPTER
TWO
Review of related literature
CHAPTER THREE
Methodology
Introduction
Research design
Population
Sample and sampling technique
Instrumentation
Validation
Method of data collection
Data analysis
CHAPTER
FOUR
Data analysis and interpretation
Findings
CHAPTER
FIVE
Summary, conclusion and recommendations
REFERENCES
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE
STUDY
A
long debated issue in banking theory is the recognizing and degree of bank
output. Although the strategic tool which banks in monetary theory and in real
world, there is little agreement on what it is that banks produce and it is
sometimes conflicting output measures service researchers especially in
estimating a banks’ production function (Benston 1982 and 1988). Banking is
characterized by certain features, which set it apart from other degree of bank
output. Banking is a service industry, and it performs many diverse roles which
include: depositing, safe advice, performing trust service, transferring and
collecting funds etc. Modern commercial banking in Nigeria date back to the
early colonial period when the African Banking Cooperation opened on office in
Lagos way back in 1982. Being the oldest unit of the Nigeria financial system,
it has been one of the most advanced of the financial institutions. The other
financial communication (intermediaries) are officially secret (restricted)
both in their capital resources and in their scope of activity, most of them
are new developments.
This enable the commercial banks an edge over others, particularly the similar
institution, example are the federal saving Bank, Merchant banks and Mortgage
banks in collecting deposits and extending credit to the economy. The
activities of banking commenced in Nigeria in the year 1872 with the
establishment of the African Banking Cooperation which has the responsibility
of distributing banks of England note for the British Treasury. The bank of
British West Africa, which is now the First bank was set up in 1892. The
National Bank of Nigeria came into existence in 1983 as the First indigenous
Bank. From 1933 to 1945 numerous banks were established. According to Foluso
Olabisi in his book introduction to banking almost 150 banks were established.
Meanwhile, only the Continental Bank and the WEMA banks that struggle to
survive. Furthermore, within the period of 1950-51 which is normally referred
to as the period of the bank boom (sudden increase) in Nigeria. During these
times almost eighteen (18) banks were quickly established. By the end of 1954
all of them have gone into voluntary liquidation with any merchant Bank in
1960. Based on the lone performance of the indigenous banks, the government set
up G. P. patron commission to look in the failures of indigenous banks. The
reports of the commission goes to the setting up of the central bank of Nigeria
(CBN) in the year 1958.
Moreover, it is interesting to note that before decree (an official order)
establishing the central bank of Nigeria in 1958. Nigerians were becoming
increasingly skeptical (NAME) of the deliberate act of discrimination of
expatriate (a person who is not living in his country) banks against indigenous
borrowers and even competing unfairly with the narrow financial base on the
indigenous bank. The establishment of the central bank of Nigeria marked a
turning point in government effort to harness or achieve the activities of the
banks and completely change (revolutionized) them for the nation’s development.
The actual revolutions in banking commercial with the banking decree of 1969.
This was followed by the indigenization decree of the hands of Nigerians. The
climax of the revolution in banking came into existence in 1976 when the
federal government set up the Okigbo committee to review the financial system.
In 1977, the federal government accepted some of the official suggestion or
recommendations was the extension of banking services to urban areas. Before
the enactment (a law which has been made official) of programme in urban
sectors, the urban dwellers were in a total hardship in terms of exchange and
the promotion of their businesses. Some of these dwellers sometimes dug (dig)
up holes to hide their money or lend them out to people who might in turn fail
to pay back the money. As a result of the forgoing there was no; proper
redistribution or sharing of money and it also lacked effective circulation.
The urban banking scheme is also part of the government effort to assist the
agriculturists who mostly reside in the urban areas and also to discourage the
migration of workers moving from the urban areas to rural centres.
HISTORICAL BACKGROUND
OF FIRST BANK OF NIGERIA
The
First Bank of Nigeria Plc for over a century has distinguished itself as a
leading banking institution and a major contribution to the economic
advancement and development of Nigeria. It was founded in 1894 by a shipping
magnate from Liverpool, Sir Alfred Jones, the bank commenced as a small
operation in the office of Elder Dempster and Company in Lagos. It was
incorporated as limited liability Company on March 31st, 1894 with
head office in Liverpool. It started business under the corporate name of the
Bank for British West African (BBWA) with a paid up capital of 12, 000 pounds
sterling after absorbing its predecessor (a thing such as a machine, that has
been followed or replaced by something else), the African Banking Corporation,
which was established earlier in 1892. This signated the preeminent (important)
position, which the bank was to set up in the years of operations, the bank
recorded an impressive growth and worked closely with the colonial government
in performing the traditional functions of a central bank, such as issue of
specie in West African sub region.
To justify its West African courage, a branch was opened in Accra, Gold Coast
(now Ghana) in 1896 and another in Freetown Sierra Leone in 1898. These marked
the genesis of banks international banking operations. The second branch of the
bank in Nigeria was opened in the old Calabar in 1890 and two years later,
services were extended to Northern Nigeria. With 339 branches spread throughout
the federation, the bank maintains the largest branch network in the industry
in Nigeria. To satisfy the needs of its customers, First bank has diversified
into a wide range of banking activities and services. These include corporate
and retail banking registraship, trusteeship and insurance brokerage. In
addition as part of its strategy of progressive internationalization (to bring
something under the control of protection of many nation) in November 2002, the
bank became the first financial institution in Nigeria to establish a
subsidiary (business company) bank in the United Kingdom.
In the 1957, it changed its name from bank British West Africa to Bank of West
Africa. In 1969, the bank was incorporated locally as standard bank of Nigeria
limited with the company decree of 1968. Changes in the name of the bank also
occurred in 1978 and 1991 to First Bank of Nigeria limited and first bank of
Nigeria Plc respectively in 1985, the bank introduced a decentralized structure
with time regional administrations. This was reconfigured (to make changes to
the ways that things are arranged to work) in 1992 to enhance the banks’
operational efficiency. In 1996 the bank introduced the FBN (First Bank of
Nigeria) century 11 project to revolutionalize its operations in line with the
dynamic of the environment.
STATEMENT OF PROBLEM
The
major problem that affects the upliftment of urban banking is merely the
indigent poorly adopted financial practices which prevail in the urban sectors.
Most people have this questioning thought regards the impacts of the urban banking
scheme on the urban areas and its dwellers. The researcher has a strong belief
that bank are supposed to be one of the institutions which government uses in
facilitating the economic growth. One of the best methods in reviewing the
economy is by paying attention on the urban areas in order to increase or
promote agricultural activities which in future will assist to raise standard
of living. For this reason looking at the urban communities they were being
left to do their banking and credit in the traditional way by using different
methods including “AJO” (daily savings collection), “Osusu” (money lenders)
which has not been so easy to develop the modern banking habit practices.
In addition, the absence or inadequacy of infrastructures (the basic system and
services that are necessary for country or an organization to run smoothly).
Institutional machinery for mobilizing saving for investment purpose has
hampered (prevent) the growth of urban sectors.
RESEARCH QUESTIONS
The following
research questions were formulated to guide the study.
Does the bank provide job opportunities
to the indigenes of Edo state?
How effective has the contributions of
banks affected the economy of individuals?
What are the problems encountered by
the banks in the performance of services to the urban dwellers?
To what extent have the banks in this
area influence the life style of the inhabitants?
Do the banking activities progress in
the urban sectors of Edo state?
Does the banking system really bring
development to the urban areas?
OBJECTIVE OF THE
STUDY
The
major purpose of this study is to look at the economy and its progress in the
urban areas of Edo state. In other words, to know the extent in which the banks
in this area have influenced the life style of the inhabitants. The researcher
work also geared (designed) or organized) towards how banking service have
helped in the development of agricultural productivity because most of the
urban inhabitants engaged in agricultural activities. Another objective of the
study ids to examine the problem encountered by the bank branches in rendering
their services to urban dwellers.
SIGNIFICANCE OF THE
STUDY
The
quality of any research work is embarked based on the necessity to the society,
that is the present need of the society. The urban banking scheme is conceived
as a source for increasing saving for allocation to the productive sector of
the urban economy most especially the agricultural sectors with a view to
boosting the well being and overall development of the urban communities. This
research is also concerned with the conception the bankers have toward the
urban banking, that it is costly and nonprofit able venture. In the view of
this research project although the scheme might be short run, it will however
be a major way in boosting the rapid (happening very quickly) growth and
development of the urban unorganized money market have influenced on the
economy for efficient utilization.
Nevertheless, the research will help students to know more about how urban
banking scheme serve as a tool for economic development and likewise meeting
the needs of the inhabitants through lending policies to finance some project
like agriculture, small scale indigenous business, government project etc.
SCOPE OF THE STUDY
This research study will use first bank of Nigeria Plc Edo state Benin City
located at Ring Road as a case study. The research will also examine how the
urban bank helped in boosting the overall economic development of Edo State, in
the area of mobilization of saving and needy sectors of economy. It also look
at the operations of the bank with respect to its lending policies adopted to
boost the agricultural sectors and the small scale indigenous industries in the
area.
DEFINITION OF TERMS
Bank: Bank
can be defined as a financial institution where money and other valuable things
are kept for security purpose. Moreover, bank is a place where money can be
deposited and to be repaid on demand or due time. It is a place where loans are
negotiated.
Banker: A
person who owns or manages a bank that is someone who looks after the bank.
Banking:
It is the business activities of a bank such as lending money, receiving
deposit, issuing notes discounting bills etc.
Deposit: A
sum of money deposited or paid into a bank or similar institutions to establish
or to add to an account which the raw materials needed for the operation of the
bank.
Account: It
is a written statement of money that is owned to a business and of money that
somebody has with a bank.
Fixed deposit
account: It is a special type of deposit account
operated by individuals, firms or public corporations with a commercial bank,
it is withdraw able only at the agreed time.
Current account: This
type of account is normally operated by traders, industrialists, public
corporations as well as individuals. The customer deposits a sum of money and
can withdraw it without notice. The withdrawal is made by using a cheque.
Loan: Is
a credit facility granted by a bank to its customers. It can be obtained from
banks, private sources and other financial institutions.
Cheque: Is
a special printed form on which an order to a bank to pay a sum of money from
one’s account to another person is stated.
Investment: The
money that you invest or the thing that you invest in and the act of giving
time or effort to a particular task in order to make it successful.
Urban area: they
are places that are distinguished from villages.
Economic development:
Is
the expansion in the productive restructuring of that society to reflect
quantitative and qualitative changes in the mode of production and the
improvement of the life pattern of a vast majority of its people.
Osusu/Ajo: It
is a traditional institution which act as a means of safe keeping money collected
from a group of individuals at the interval of every month every week or market
day at the end of which the person takes possession of the whole money
contributed. It continues until it has gone to the turn every of every member.
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