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Staff Perception of the Impact of the Twenty-Five Billion Naira Recapitalization Policy in Nigerian Banking Industry

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Staff Perception of the Impact of the Twenty-Five Billion Naira Recapitalization Policy in Nigerian Banking Industry.

ABSTRACT

This study investigated the staff perception of the impact of the N25 billion minimum capital base on Nigerian banking system using case study of some selected banks namely; First Bank of Nigeria Plc, Union Bank of Nigeria Plc and United Bank for Africa Plc.

The research was geared towards finding both the positive and negative impacts of the N25 minimum capital base on Nigerian banking system, the impacts of the N25 billion minimum capital base on bank workers/bankers e.t.c. To achieve this, relevant literatures were reviewed.

Also using the selected banks, the researcher employed both primary and secondary sources of  data collection for the analysis.

The primary sources of data collection employed include questionnaires, oral interview and observations  while  the secondary sources of data collection employed include textbooks, newspapers, journals and seminar papers.

Statistical tools like tabulations and Chi-square were used to analyze the data collected. From the analysis done, the following findings were made; the N25b minimum capital base has significant impacts on the Nigerian banking system.

The N25b minimum capital base has not significantly improved the competitive efficiency of the Nigerian banks, the N25b minimum capital base has not led to  retrenchment of many bankers and N25b minimum capital base has led to mergers and acquisition within the banking industry which may of course lead to more strong and reliable but few banks.

The study equally concluded that the exercise posed some problems on the regulatory authorities.

Finally, the researcher recommended that; the banks’ capital base should be stratified into investment and universal bank  categories  with each having a capital base according to the services it renders and its risk profile, necessary policy framework should be established to improve  on the quality of bank management and the general security network.

TABLE OF CONTENTS

Title page – – – – – – – – – – -i
Approval page – – – – – – – – – -ii
Dedication – – – – – – – – – – -iii
Acknowledgements – – – – – – – – -iv
Abstract – – – – – – – – – – -v
Table of Contents- – – – – – – – – -vi

CHAPTER ONE :INTRODUCTION

1.1 Background of the study – – – – – – -1
1.2 Statement of the Problem – – – – – – -4
1.3 Objectives of the Study- – – – – – – -5
1.4 Research Questions – – – – – – – -6
1.5 Hypothesis of the Study – – – – – – -6
1.6 Scope of the Study – – – – – – – -7
1.7 Limitation of the Study – – – – – – – -7
1.8 Significance of the Study – – – – – – -8
1.9 Definition of terms- – – – – – – – -9

CHAPTER TWO :REVIEW OF RELATED LITERATURE

2.1 A Historical Perspective of the Nigerian Banking Industry – -11
2.2 Brief History of the Selected Banks – – – – -12
2.3 Meaning and Functions of Commercial Banks – – – -15
2.4 The Concept of Bank’s Recapitalization – – – – -17
2.5 Roles/Significance of Capital in Banking – – – – -19
2.6 Overview of Banks Minimum Paid up Capital in Nigeria – -22
2.7 Characteristics of the Nigerian Banking Industry – – -26
2.8 Rationale for Banks Recapitalization – – – – -29
2.9 Aims and Objectives of the N25 Billion Banks Recapitalization -31
2.10 The Impacts of the N25 Billion Recapitalization policy in the Nigerian Banking Industry –33
2.10:1Positive Impact of the N25 Billion Recapitalization policy in the Nigerian Banking Industry –40
2.11 Negative Impact of the N25 Billion Recapitalization policy in the Nigerian Banking Industry –46
2.12 The Post Recapitalization Regulatory Challenges – – -49
2.13 Measures Adopted to Address the Challenges – – – -52

CHAPTER THREE:METHODOLOGY

3.1 Research Design- – – – – – – – -53
3.2 Sources of Data collection – – – – – – -53
3.3 Area of Study – – – – – – – – -55
3.4 Population of the Study – – – – – – -55
3.5 Sample Size and Sampling Technique – – – – -55
3.6 Method of Data Analysis – – – – – – -58
3.7 Decision Rule – – – – – – – – -59

CHAPTER FOUR:PRESENTATION AND ANALYSIS OF DATA

4.1 Testing of Research Hypotheses – – – – – -67
4.2 Implication of Results – – – – – – -77

CHAPTER FIVE: DISCUSSION, CONCLUSION AND RECOMMENDATION

5.1 Summary Of Findings – – – – – – – -79
5.2 Conclusion – – – – – – – – – -80
5.3 Recommendation – – – – – – – -81
Questionnaire Sample – – – – – – – – -84
References – – – – – – – – -89

INTRODUCTION

1.1 Background of the Study

Banking institutions occupy a central position in the financial system of any nation and are essential agents in the development process of market economies.

They are particularly relied on for the promotion of financial integration of the various parts of a country; bringing about improvement in the mobilization and utilization of funds for increased capital formation. It is obvious that banks must be viable and healthy and its stability and soundness provided for.

Based on this, the industry is usually heavily supervised and regulated by government or her agencies. The soundness and stability of the banking industry promote public confidence and provides liquidity and safety of shareholders funds. This is one of the reasons why government or her agencies demand reforms of the industry.

On this ground, the Nigerian Banking Industry had undergone remarkable changes over the years, in terms of the number of institutions, ownership structure as well as depth and breadth of operations.

The  industry has  been witnessing prudential regulation and control in an attempt to address the backdrop of banking crisis due to highly under-capitalization, deposit taking banks, weakness in the regulatory and supervisory framework; weak management practices, and the tolerance of deficiencies in the corporate government behaviour of banks.

REFERENCES

Adegbaju, A.A and Olokoyo, F.O (2008), Recapitalization and Banks’ Performance: A Case Study of Nigerian banks. African Economic and Business  Review  Vol.  6 No. 1 ISSN 1109-5609

Ajayi, M. (2005), Banking Sector Reforms and Bank Consolidation: Conceptual framework, Bullion, Vol. 29, No. 2.

Alio, F.C and Ukandu, D.O. (2006), The Economic Effects of the  New Capitalization Policy for Nigerian Banks: Nigerian Journal of Banking and Finance, Vol.6

Aremu, I. (2004),Capital Base or Capital Control. The Guardian, 9 (3012), Lagos: Guardian Newspaper Limited.

Babalola, A. (1989), Assessment of Bank Performance  in  Nigeria  Comparative Situation. CBN Bullion Vol. 2, No. 2, Lagos CBN Research Department

Balogun, E.D (2007), A review of Soludo’s Perspective of Banking Sector Reforms in Nigeria. July 2. Online at  http://mpra.ub.uni-muenchen.de/3803/  MPRA  Paper No. 3803, posted 07 November 2007/03:28

Bello, Y. A. (2005). Banking System Consolidation in Nigeria and Some Regional Experiences: Challenges & Prospects. Bullion,29(2).

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