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THE ROLE OF COMMERCIAL BANKS TO THE INDUSTRIAL DEVELOPMENT SECTOR IN NIGERIA A CASE STUDY UNITED BANK FOR AFRICA (UBA) (1980-2007)



ABSTRACT


It
could be affirmative said that the index for measuring any growing economy’s
technological advancement is the extent to which its industries both the large
and small scale has been growing over time.


It’s
a fact that none of these industries can grow without the required financial
assistance from financial institution.


Industrialist
had in recent times subscribed to discriminate behavior of the Nigeria
commercial banks towards granting of finance as one of the reasons that
militate against the growth of industries in Nigeria.























TABLE OF CONTENT


Title
page………………………………………………………….……..…


Approved
page……………………………………………………….……


Dedication
…………………………………………………………………


Acknowledgement…………………………………………………………


Abstract………………………………………………………….………….


Table
of content……………………………………………..…………….


CHAPTER ONE INTRODUCTION


 1.1      Background
of the study ……………………….….…………….


1.2       Statement of the
problem………………….……….…………….


1.3       Objectives of the study
…………………….……….…………….


1.4       Statement of
hypothesis……………………..…….…………….


1.5       Significance of the study …………………………..…………….


1.6       Research question………………………….…………..………….


1.7       Scope and limitation……………………………………………….


CHAPTER
TWO: LITERATURE REVIW


2.1
      Theoretical
literature………………….…….….……………………..


2.2       Empirical
literature…………………………..………….……………


CHAPTER
THREE RESEARCH METHODOLOGY


3.1       Model specification…………………………………….…………….


3.1.1   Regression model ……………….…………………….….………….


3.2
      Method of estimation
………………………………….…………….


3.3
      Method of
evaluation…………..……………………….…………….


3.4       Sources of data ………………………….…………………………….


CHAPTER
FOUR: PRESENTATION AND ANALYSIS RESULT


4.1    Presentation of Result……………………………………………….


4.2    Evaluation of Result ………………………….……………………..


4.
2 .1   Economic theoretical test
………………………….……………….


4. 3   Statistical test of Significance…………………………...…………


4.4    Policy implementation of the
study……………………………….


CHAPTER
FIVE: SUMMARY, POLICY RECOMMENDATION AND CONCLUSION


5. 1   Summary of the finding ………………………….…………..……………


5 .2   Policy Recommendation………………………….……………………….


5 .3   Conclusion………………………….…………………..…………………..


Bibliography………………………….………………..…………………


Appendix………………………….…………………………………….








CHAPTER
ONE


INTRODUCTION





1.1       BACKGROUND OF THE STUDY


The
practice of banking and financing in Nigeria is culturally rooted and dates
back several centuries ago. In the 1940s, the traditional financial
institutions provide access to credit for rural and urban low- income earners.
They are mainly of the Informal Self Help Groups (SHGS) or Rotating Savings and
Credit Associations (ROSCAs) types. The informal financial institutions
generally have limited outreach due primarily to paucity of loanable funds. In
order to enhance the flow of financial services to Nigerians, government has in
the past, initiated a series of publicly financed micro credit programmes and
policies targeted at productivity enhancement.


Notable
among such programmes were the Rural Banking Programme, Sectoral Allocation of
Credits, the Agricultural credit Guarantee Scheme (ACGS) etc. Other institutional
arrangement were the establishment of the Nigerian Agricultural and
co-operative Bank limited (NACB), the National Directorate of Employment (NDE),
the People Bank of Nigeria (PBN), the Community Banks (CBs) and the family Economic
Advancement Programme (FEAP) all aimed at improving the economic growth of the
nation.


Year
2005 was remarkable in the history of Nigerian Banking Industry. The
consolidation exercise Initiated by the Central Bank of Nigeria (CBN) on July
2004 came to head on December 31, 2003 with 14 banks unable to meet the #25
billion recapitalization requirement. The apex bank revoked the licenses of the
14 banks. Meanwhile, the 25 banks that successfully met the #25 billion minimum
capital requirements represent 93.5% of the total deposits of the 89 banks that
existed in country reconsolidation. In the process, about #406 billion was
raised from the capital market while an inflow of 652 million was generated
from outside the economy.


In
order to lower industry cost of funds, the Cash Reserve Ratio (CRR) was reduced
by 6% points from 11% to 5% with the difference expected to be invested by
banks in special Central Bank of Nigeria (CBN) instrument with a tenure of
91days at 3% coupon rate. Furthermore, a 1- year treasury bill was introduced
on July 1, 2005 with a view to restructuring the deposit profile of the federal
Government. Similarly, in order to reduce inequality pressure, reverse
inflationary trend and encourage long tenured investment, the 182 days non.
Discountable bill was introduced.  


Commercial
Banks are involved in the process of increasing the wealth of the economy,
particularly the capital goods needed for raising productivity. In developing
countries like Nigeria, income is very low and that as such low level investment
can be made, if possible without requiring a long period effort at saving.
Financial intermediaries have a vital role to play here, in raising both the
savings and investment to the level necessary to achieve a self sustained
growth.


In
manpower development, Banks contribute highly in training staff and development
through both local and foreign facilitation. In order to strengthen our work
force and take advantage of emerging market opportunities, Banks also recruit
various  professionals with broad
industry knowledge and hands- on experience.


In
financing the economy, the bank has aligned its financial intervention in the
economy with a clear understanding of high impact character of  government’s privatization and deregulation program.
The search made for the most efficient and effective domestic lending portfolio
has meant that commercial Banks have led the financing of private investment in
industrial development in the economy.


The
financial institutions are therefore capable of influencing the major savings
factors namely; ability, willingness or saving propensities and opportunities.
The need to achieve sustained industrial growth within any economy can be
possible amidst strong financial institution and precisely within the existence
such that are tailored to work in accordance with government policies and
program in a bid to attaining the desired macro-economic objectives of a
nation. Banks as components of financial sector consist of the apex i.e Central
Bank, Commercial Banks, Development Banks, Merchant Banks and Specialized
banks.


1.2       STATEMENT OF THE PROBLEM


            Evidently, an important avenue for
banks to boost the growth of the industrial sector of the economy is through
efficient and effective saving investment process which ought to stimulate
investment and productive activities. For the past three decades, the Nigerian
economy has not shown any favorable sign of growth. for example, the real G N P
growth rate figures was 2.8% in 1995 with negative figures in year like 1982 with
0.3% etc (as depicted in the C B N periodic bulletin 1986)


            From this background we are
therefore poised to answer the burning questions like.


(1)    In what extent does commercial bank as a
financial intermediate contribute towards funds mobilization for industrial
growth and development of the country.


(2)
Is there any relationship between commercial banks financial industrial
development growth in Nigeria


(3)    What are the problems commercial banks
encounter in their performance towards mobilization of fund for industrial
development growth.


1.3
OBJECTIVES OF THE STUDY


The
objective of this research work are stated as follows


1.   To determine the role of commercial banks
towards a positive industrial growth and development.


2.   To identify and analyze the constraints and
short comings facing commercial banks in Nigeria towards fund mobilization for
industrial growth and development


3.   To examine ways in which the commercial banks
in Nigeria can be made to play better roles towards fund mobilization for
industrial growth and development.


4.   To determine and test the effect of some relevant
economic variables and factors in the real gross domestic product (GDP) of
Nigeria.


1.4       STATEMENT OF HYPOTHESIS


The
following hypothesis are tested on this study


Ho;
Commercial banks have not played a significant role in the industrial growth in
Nigeria   


H1:
Commercial banks have played a significant role in the industrial growth in
Nigeria.





1.5       SIGNIFICANCE OF THE STUDY


            The usefulness of this study is that
it will highlight to the nation as a whole on how best to manipulate commercial
bank loans for financing in order to improve the state of industrial product in
the country.


            It will also give the government an
overview of constraint of industrial financing and how best to manage
commercial bank loan in order to yield output.


            It will show commercial banks how to
increase industrial financing for growth in the economy.


1.6       REASEARCH
QUESTIONS


(i)     Do
commercial banks give loan for industrial financing?


(ii)    If
so, to want extent has the industrial sector growth since the assistance
started.


(iii) Is there any relationship between
commercial banks financing and the Nigeria industrial growth?


1.7 SCOPE OF STUDY

            This
study is designed to find out the role of commercial banks towards financing
industrial activities in Nigeria. Emphasis