Distress Management and Prevention Strategies for the Nigerian Banking

Distress Management and Prevention Strategies for the Nigerian Banking 


In this work, the researcher worked on different ways of preventing banking distress.

The work is divided into two chapters. Chapter one heated the permute encapsulating the general overview, statement of the problem, etc chapter two review related literature while chapter three handle the research methodology utilized in writing this project.

Chapter four is concerned with the presentation and analysis of findings, while chapter five the researcher summarized her findings made recommendations and concluded her work.

It was discovered that the bank should adhere strictly to the rates of the game, the regulatory/supervisory authorities should enhance the supervisory capacity.


Title page                                                                 i

Approval page                                                        ii

Dedication                                                              iii

Acknowledgement                                                iv-v

Abstract                                                                    vi

Table of content                                                      vii


1.0  Introduction                                                       1

1.1  General overview of study                                1

1.2  Statement of problem                                       3

1.3  Objectives of study                                     3

1.4  Scope of the study                                              4

1.5  Research question                                              4

1.6  Significance of the study                                   5

1.7  Limitation of study                                             6

1.8  Definition of terms                                             6


  • Literature review  10

2.1  Background of banking                                       10

2.2  Definition of distress                                           14

2.3  Conceptual issues in distress management     18

2.4  Extent and implication of distress                     21

2.5  Causes of financial sector distress                      25

2.6  References                                                               37


  • Research methodology  38

3.1  Research design                                                      38

3.2  Data collection sources

And their reliability                                                  39

3.3  Research population                                               40

3.4  Sampling method                                                    40

3.5  Method of data analysis                                         40

3.6  Simple percentage                                                   41



  • Data presentation and analysis 42

4.1  Data presentation                                                        42

4.2  Data analysis                                                               46


  • Summary, conclusion and recommendation     49

5.1  Summary                                                                      49

5.2  Conclusion                                                                   49

5.3  Recommendation                                                      50

Bibliography                                                                51

Appendix                                                                     52

Questionnaires                                                        53-54




Firstly, the Financial sector distress is neither new nor peculiar to Nigeria. in fact, the phenomenon is almost as old as the industry. In spite of their best endeavors, financial sector distresses still occur in older banking societies like Britain, America, Spain, Indonesia, and many others even all the moment (Cologne 1993 313.

Therefore, this is assertion is the giving the fact that financial sector distress, especially in banks, occurred in Nigeria in the mid-50s when a total of 185 banks were reportedly established between 1947 and 1952 of which many of them failed (Nwankwo 1982 pg 47-48) the celebrated failure of Baccl-bank of credit and commerce international of U.S.A.

Hence, in 1992 and the collapse of Britain’s 233 old barring bank in 1995 after a loss of $ 1billion (about N100 billion) is evidence that financial sector distress is rather new peculiar to Nigeria’s service.

Therefore, the last few years have been both traumatic and revolutionary for the Nigerian banking industry accustomed to steady profits and little or no problems since 1959 when the CBN was established, the industry has in recent lines produced the largest number of technically insolvent and undercapitalized banks.

Currently, the magnitude of distress in the nation’s banking industry has reached an unperceived level thereby making it an issue of concern to the government, the regulatory authorities, the banker, and general public service.

Hence, it should be noted that the banking system already in distress by the line the NDIC was established by then, about seven banks were known to be technically insolvent.

Theerefore, the government at that time, did not embark upon a creasing exercise that would have removed the distress institution from the system because it was faired that such an action would lead to loss of public confidence and flight of foreign capital more which was no deposit insurance institution to expeditiously manage such bank.


Therefore, this is project is entitled to distress management and prevention strategies for the Nigerian banking system. The last few years, no doubt the Nigerian banking industry as a result of the harsh economic environment.

Although some level of success could be said to have been recorded in the last one of half years, especially in the area of macroeconomic stability, available records, however, have continued to show that the economic environment in which insured banks have been operating in a very difficult one


It should be noted that no matter the number of banks established without effective supervisory financial control, the objective would be deflated and subsequent banks wind up.

The aim of this study is to prevent distressed bank management of the Nigerian banking system. In realizing these objectives should be.

The adequate regulatory banking system

1.1  Change of management

1.2  Assumption of control and management

1.3  Liquidation of distressed banks

1.4  Suspension of banking license


Therefore, the study will occur in a general review of the distress and management prevention strategies for the Nigerian banking system. And it will be elaborated in a way that one will understand it.


The researchable question to be considered your research question should be measurable

Does poor management of a bank result of bank distress

Can the death of an experienced and qualified person of a bank cause use distress

How monetary supervision in bank works.


Therefore, this research is useful for success to the student in the department of banking and finance and also for banking industries in the Nigerian economy. For the management of distress in the economic-financial sector for the promotion of maximum efficiency and full capacity utilization finance. It is therefore meant for consumption.

The bankers

The government

The general public

Future researcher


Hence, some limitations I encountered is the problem of searching for a research topic and looking for the head of the department to approve the topic and the problem of finance on my own way had delayed this work to be finished in time.


Akpan N. (2000) Universal Banking Post Expenses May 31 P. 15 Journal.
Akpan N. (2000)  Universal Banking will Fail, Post  Expenses Oct. P. 15 Journal.
Editonal (1999)    Nigerian Banks and Globalization the  Nigeria Banker. CIBN June – December 1999.
Federal Budget (1999)  Banking Policy Measures Business Fines, Lagos, Jan 18.
Kanu N.ON. (2001)  Fundamental of Nigerian FinancialSystem Owerri, Bon Publication.
Kyaria A. (1999) Global Banking Bracing the Odds the Nigerian Banker Lagos. July – December 1999
Adekanya Femi (1988)  The Element of Banking 3rd Edition Lagos F& Publishers Limited.

CSN Team.

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