bank distress in nigeria problems and prospects a case study ofafricancontinentalbank nigeria...

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BANK DISTRESS IN NIGERIA PROBLEMS AND PROSPECTS A CASE STUDY OFAFRICANCONTINENTALBANK NIGERIA LIMITED. BY AMHANYUNONSEN. A. MARCUS MAT NO. 962060598 DEPARTMENT OF ACCOUNTANCY COLLEGE OF MANAGEMENT AND SOCIAL SCIENCES UNIVERSITY OF ABUJA ABUJA, NIGERIA

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ABSTRACTBanking industry in Nigeria has been undergoing a turbulent period I recent time, the one that is characterized by bank distress. It’s a well-known fact that banks operation is invaluable to the growth and development of any economy. Moreover, what happens in the sector not only affects it alone but also the citizens of the entire nation.It is as a result of these facts that the researcher chooses this topic with the hope that the findings at the study will provide a lasting solution.Mainly reviewing the related literatures and analysis of primary data collected through the administration of questionnaires to the target respondents has carried out the research.The summary of findings indicated that there are still positive and hopeful prospect available to the banking industry. This appears to be a cheerful outcome of this research work to this study. However, the suggestions and recommendations of this research work as contained in chapter five should be adhered to strongly. TABLE OF CONTENTTitleCertificationDedicationAcknowledgementAbstractTable of ContentsCHAPTER ONE1.0 Introduction1.1 Background of the study1.2 Statement of the problems1.3 The objective of the study1.4 Research questions1.5 Statement of hypothesis1.6 Significance of the study1.7 Scope of the studyCHAPTER TWO2.0 Literature review2.1 Development of Banks in Nigeria2.2 Era of free banking (1892-1951)2.3 Emergence of banking regulations and era of bank failures (1952-1958) 2.4 Era of consolidated growth following the establishment of Central Bank (1959-1985)2.5 Era of financial systems deregulations (1986)2.5.1 The promulgation of the banks and other financial institutions decree (BOFID)2.5.2 Chartered institute of bankers of Nigeria decree 19922.5.3 Failed banks (Recovery of debts) financial malpractices in banks Decree 1995 (FBD)2.5.4 What is distress?2.5.5 Nature of distress2.5.6 Distress: The Nigerian bank experience2.5.7 Manifestation of financial distress2.5.8 Measurement of financial distress2.5.9 Camel rating system2.5.10 Composite rating system/scheme2.6 Causes of distress2.6.1 Internal (Endogenous) causes of bank failures2.6.2 Lack of experience and adequate personnel2.6.3 Fraud forgeries and insider abuses2.6.4 Poor loan administration2.6.5 High overhead cost2.6.6 Poor internal control2.6.7 Deflation, embezzlement, and financial manipulations.2.6.8 Capital inadequacy2.6.9 Inept management2.6.10 Ownership structure/political interference in the Management of banks2.6.11 External (Exogenous) causes of bank failure2.6.12 Macro – economic instability2.6.13 Unfavourable policies by the government2.6.14 The role of securities and exchange commission (SEC) and Nigerian Stock exchange (NSE)2.6.15 Lack of autonomy for the regulatory authorities2.6.16 Lack of institutional support2.6.17 Indiscipline and corruption in the society2.6.18 Impact of deregulation2.6.19 Depositors greed and ignorance2.7 Consequences of distress2.7.1 Retardation of capital formation, employment and pace of economic Growth2.7.2 Lost of depositors fund2.7.3 Treat to the development of an efficient payment mechanism2.7.4 Excessive cost of recapitalization2.7.5 Low savings and investment2.7.6 Other consequences2.8 Should the distress be allowed to continue?2.9 The way forward2.9.1 Roles of bank board2.9.2 The role of bank management2.9.3 The role of other banks2.9.4 The role of depositors2.9.5 The role of supervising authorities2.9.6 The role of government2.9.7 The role of others2.10 Causes of banks failures in other countries and their tested solutions2.10.1 United State of America (USA)2.10.2 United Kingdom (UK)2.10.3 Czech banks2.10.4 Switzerland2.11 ConclusionCHAPTER THREERESEARCH DESIGN AND METHODOLOGY3.0 Introduction3.1 Source and method o

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Page 1: BANK DISTRESS IN NIGERIA PROBLEMS AND PROSPECTS     A CASE STUDY OFAFRICANCONTINENTALBANK NIGERIA LIMITED

BANK DISTRESS IN NIGERIA PROBLEMS AND PROSPECTS

A CASE STUDY OFAFRICANCONTINENTALBANKNIGERIA LIMITED.

BY

AMHANYUNONSEN. A. MARCUSMAT NO. 962060598

DEPARTMENT OF ACCOUNTANCYCOLLEGE OF MANAGEMENT AND SOCIAL SCIENCES

UNIVERSITY OF ABUJAABUJA, NIGERIA

July, 2010

Page 2: BANK DISTRESS IN NIGERIA PROBLEMS AND PROSPECTS     A CASE STUDY OFAFRICANCONTINENTALBANK NIGERIA LIMITED

BANK DISTRESS IN NIGERIAPROBLEMS AND PROSPECTS,

A CASEA STUDY OF AFRICAN CONTINENTAL BANKNIGERIA LIMITED

BY

AMHANYUNONSEN MARCUS. A. MAT. NO. 962060598

BEING A RESEARCH WORKPRESENTEDIN PARTIAL FULFILMENT FOR THE

AWARD OF BARCHELOROF SCIENCE (BSc.) DEGREE IN ACCOUNTING.

DEPARTMENT OF ACCOUNTANCYCOLLEGE OF MANAGEMENT AND

SOCIAL SCIENCESUNIVERSITY OF ABUJAABUJA, NIGERIA.

July, 2010