THE CONTRIBUTION OF FINANCIAL INSTITUTION IN THE DEVELOPMENT OF NIGERIA ECONOMY
1.1 BACKGROUND OF THE STUDY
The ideal of establishing indigenous Financial Institution came into effect the end of the first world war (1914). The gave rise to the establishment of the National Bank of Nigeria ltd in , African continental Bank ltd in (1947), 614 before the emergence of the indigenous banks, the standards Bank (now first Bank of Nigeria plc) has commenced banking operation in (1894).
In (1998) the central Bank ordnance was passed out and it commenced operation in July, 1st 1954. After the development banks, commercial Bank, Merchant Banks, Community Bank, Insurance company etc. indeed their emergence was largely informed by the need to contribute positively to the growth and development of Nigeria economy.
In Nigeria today, there are about one hundred and Sixty – eight (168) Bank and over ninety-four (94) insurance companies operating various business of larger scale dimensions.
As the economic environment stands at the moment, it is one that really poses a challenging task before all these Financial Institutions. Our financial resources need to be properly and judiciously utilized. Small scale industries as well as other industries in their stages of development need adequate funds to put them on solid footing. Farmers equally need sufficient credit facilities to enable them put more effort in agricultural investments. In the same vain, individuals as well as government need money to embark on valuable and profitable economic ventures. Against these for going background, it is evident that the Nigeria dreams of building a safe and sound that economic structure will come to nothing in the absence of reliable and well-concord financial Institutions. For better understanding of this research work, I have organized these work-ups into chapters.
Chapter 1-2 which includes this introduction, background of the study, definitions roles, Advantages, objective and problems facing financial institution in Nigeria e.t.c.
Chapter 3 looks at the problems confronting the financial institutions recommendation and conclusion.
1.2 PURPOSE OF THE STUDY
As already pointed our in the introductory it would be recalled here that the establishment of the central Bank in (1958) gave rise to the emergency of several others indigenous financial institution in subsequent years. The aim behind the establishment of such institution was to development by financial indigenous business in both industry and commerce.
Against the background therefore, this particular study tried to find out whether these financial institution measure up to the following exceptions for which they were established.
1.To join foreign skills and expenses and foreign private company with Nigeria skills and capital in the development of new industries and expansion of existing ones.
2. To create alternative opportunities for investment in Nigeria industries.
3. To work closely with the various government and state development cooperation.
4. To provide equity capital and funds via loans to indigenous firms and institution for wither short-term, medium-term or long-term investment in commerce and industries.
This study also tried to ascertain the authorized share capital of these institution as well as the method and capacity of funds disbursement to industrialists and other commercial entrepreneurs with a view to fostering economic development of Nigeria.
1.3 LIMITATION OF THE STUDY
This research work title “THE ROLE OF FINANCIAL INSTITUTION IN THE DEVELOPMENT OF NIGERIA ECONOMY” Covers a very vast area. Due to obvious financial constraints and of cause for purpose of management, I deemed if necessary to restrict my study to Financial Institution within Enugu Urban. Some of these selected financial institutions include the central Bank of Nigeria, Commercial Banks, Merchant Bank, Development Banks, Community Bank and Insurance companies e.g. Universal Insurance Company ltd.
In choosing these sample/representatives, financial institutions. In have limited my research in these are of operation of these institutions that enhance the nations economic development and influence drawn from them to apply to other financial institution faced with the sole responsibility of economic development in Nigeria, have the same aim and objectives to enhancing the economic development or growth and making her economic vibrant and comparable with other prevailing economic in the competitive international economic system.
1.4 SIGNIFICANT OF THE STUDY
The ideal of setting up to the various financial institution in Nigeria was that, they would in no small way speed up the economic growth and development of the nation.
The significant of this study can be achieved by giving loans and offering sound financial advice to the industrialists and entrepreneur their investment advice.
The study of the roles of financial institution in Nigeria economy will not only enhance the economy viability of the country, but will also improve the standard of living of the people. This is because Job opportunities will be opened up for the unemployed population. Again, these study is significant because of brought our great focus on the number of performed by these financial institutions geared towards meeting the economic and financial objectives of many Nigeria and consequently putting the nation into a sophisticated level of economic development. It is also highlighted that effort made by these institution to bridge the gap existing between the Nigeria economy and that of the economic of the highly industrialized countries.
Finally, this study is very important because having examined the various roles performed by these financial institution, it will enable any developing nation hoping to establish financial institutions to make clear cut decision in their drive to speed up economic growth and development.
1.5 DEFINITION OF THE STUDY
1. BANKS: A bank can be defined as any person or corporation that provides the minimum banking service and which in licensed as a bank by the federal Government of Nigeria as a banking institution.
2. CENTRAL BANK: The central bank is the central of a country’s financial system.
3. MERCHAT BANK: This is the type of bank that provide long and medium term loans and advance for trade and industries.
4. COMMERCIAL BANK: This is bank that specialized in keeping money and valuable safety.
5.CHEQUE: A cheque is a simple instruction to a bank to pay a certain sum of money to the person named on the cheque or the bear of the cheque.
6. LOAN: A loan can be defined as a sum of money been lend to customers for their day to day business.
7. INSURANCE: Insurance is a contract by which one party undertakes to indemnity another against loss, damage.
8. CAPITAL: This includes the contributions of shareholders and undistributed profits.