Bank distress has been a predominant factor in the banking system
of Nigeria since the early years of banking. This trend became noticeable
in the industry with the failure of many banks in the early 90’s and late 90’s
distress saga brought about the research work the evaluation of the impact of
the Nigerian deposit insurance corporation (NDIC) the work is structured
into a five chapter book for easy and comprehensive reading.
The frist chapter deals with the background of the prevailing
circumstance in the industry that necessitated the establishment of the deposit
insurance scheme it further work on the reveal the various loopholes and
bottlenecks of the supervisory authorities and also examine the impact of the
regulatory and supervisory bodies (NDIC & CBN) at resolving the prevalent
bank distress and failure. It also shows the extent and depth of distress
the measurability of distress and also states the various distress resolute on
option such as revocation of licenses increase and acquisition and
financial assistance given to affected banks by the regulatory authorities.
The materials and techniques used in acquiring the information
needed for the research work were purely secondary data obtained through
the reviews of journals newspaper past work by other students and seminars by
well known academicians. Based on analysis of the data collected
information leading to distress of banks were certified and most of the causes were
also certified they were traced to be caused by institutional factors,
political and economic factor similarly and were drawn from the major finding
of the research work and adequate recommendation were made in line with the
finding to enable readers who will find the work germane to the field and
subsequently bring about animal or nonexistent of distress in the Nigeria
1.1 Background of the study
1.2 Statement of problems
1.3 Purpose of the study
1.4 Scope and limitation of the study
1.5 Significance of the study
2.1 What is deposit insurance
2.2 Definition of distress
2.3 Causes of distress
2.4 Measures of distress
2.5 Extent and depth of distress
2.6 Resolution of distress
2.7 NDIC controlling derive over financial
RESEARCH DESIGN AND METHODOLOGY
3.1 Sources of data
3.2 Location of data
3.3 Method of data collection
SUMMARY OF FINANCES
Summary of findings.
CONCLUSION AND RECOMMENDATION
BACKGROUND OF THE STUDY
The federal government of Nigeria ride decree No 22 established
the Nigeria deposit insurance corporation in July 1988, This regulatory
institution is set up to insure all deposit liabilities of licensed banks
and other financial institutions the NDIC act Capt 301 L.F.N 1998 further
stress on the establishment of the NDIC by the federal government to incuse
bank deposit protect depositors interest and also help in promoting page and
sound banking system and further inculcating banking habit among our people.
The Nigeria deposit insurance corporation is an antonymous
regulatory body and has the authority to examine the books and affairs of
insured banks and other deposit taking financial institution every licensed
bank and other deposit taking financial institution operating in Nigeria are
man dated to insure its total deposits.
A depositor in a Nigerian deposit insurance corporation insured
bank will not pay for the cost of this deposit insurance. It is the insured
bank that pays through annual assessment on its volume of such deposits.
The authorized capital of the corporation is N100 million out of
which N50million had already been called and paid up by the federal government
and central bank of Nigeria banks of Nigeria (CBN) in the ratio of 2.3 the
decision by the federal government of Nigeria to establish the NDIC are.
1. To encourage saving by increasing the
safely of deposit and ensuring development of banking practice.
2. To refund every insured bank depositor to the maximum
tune of N50,000 if this bank is liquidated.
3. To protect the deposit of customers.
In Nigeria today hardly can any year pass by without one hearing
of one kind of distress or the other in the banking sector. The problem of
distress in the financial sector including outright bank failure was observed
in Nigeria as far back as 1930, when the first bank failure was reported.
Between 1930 and 1958 when the CBN was established over 21-bank failure was
reported the number of banks today classified as problem banks as on the
increase and have continued to be of serious concern to depositor government
and regulatory authorities.
1.2 STATEMENT OF PROBLEMS
This problem of distress in the financial sector has consumed a
greater part of the Nigerian financial services industry.
Between 1993 and 2000, the financial condition of banks in particular
worsened considerably according to NDIC reports by the end of 1993 27 banks
were officially classified as distressed by 1994, the number rose to 47, 63 in
1995 and 89 in 1996 however the figure dropped after the establishment of
deposit insurance scheme to 34 banks in liquidation as at December 2000.
During this period a number of measures were adopted by the
regulatory/ supervisory authorities to resolve the distress problem. The goal
therefore is to know how effective this regulating/ supervisory authorities
especially the Nigerian deposit insurance corporation (NDIC)have been resolving
distress in the Nigerian financial sector through the various policies.
1. The Nigeria banking industry in recent years has
operated in an environment that has been very conducive on the economic
front the nation continued to wittiness high rate of inflation balance of
payment problems high debt burden low productivity industrial unrest and
general economic decline.
2. In protecting banking system form collapse and
above all, to find out how the distressed banks are responding to the policies
and other distress resolving
1.3 PURPOSE OF THE STUDY
Considering the various bottlenecks and adhere distress resolution
strategies had not significantly achieved the distress objective in terms of
the safely soundness and stability of the financial system.
This work aims at the development of a more comprehensive
framework for prompt and efficient resolution of the crisis the specific
objectives of this work include
a. Objectively determine the cause of the present
distress conditions in the Nigerian service industry.
b. Access the extent and the depth of the distress
situation in the Nigeria service industry.
c. Undertake a
comprehensive review of developments is the financial services industry in Nigeria
particularly during the period 1986-2000 for necessary insight into the
operation of the Nigerian financial system.
d. On the basis of the findings of the work
ascertain the effects of The existing financial polices in the Nigerian financial
1.4 SIGNIFICANCE OF THE STUDY
This study is conducted so as to give an insight review of issue
of distress in Nigerian banking industry and the effect it has no the nations
financial system the work will be useful to the management of these banks other
institutions as well as the government in the following ways.
a. This work will aid them in the adoption of a
more realistic approach to solving these institutional problems like distress
crisis frauds and forgeries.
b. The study also assess the regulatory agencies
especially the NDIC & CBN in the banking sector and this reviews the
lapses in their policies. It is the first step in the reactivation
of effective regulation system is the Nigerian financial services industry.
c. It would also provide a yardstick for further
researchers in this field of academic discipline.
1.5 DEFINITION OF TERMS
i. Collateral/ Securities
are properties e.g. stocks and bounds pledges as security for repayment of a
is the process whereby the government does not apply it stick systematic
control of the financial sector to the core like in the banks where they are
allowed to six interest rates.
Cross default: In the infer- bank market, where one bank
fails to meet its financial obligation to another, it is said to be involved in
Insolvency: where a bank can no longer fulfill
its obligation of payment to its depositors as q result of squeeze that
bank in said to be Insolvency.
TERMS AND CONDITIONS APPLY
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